Why pay for financial advice? – Twin towns

Bruce Helmer and Peg Webb

Several research studies show that people who use financial advisors do better, on average, than those who don’t, so why aren’t more people willing to pay for financial advice?

There are many reasons. With so much information online and index funds offering inexpensive exposure to all corners of the investment universe, many investors think they can do it themselves. Some rely on computer models that automatically invest and rebalance their portfolios, without any human intervention. Others are inundated with information from all corners and don’t know who to trust.


People typically decide to hire a counselor when they are settling into a career, starting a family, or experiencing another major life event. With busy lives, many find they don’t have the time or inclination to manage their finances on their own. Financial advisors have the training and experience to help you put your financial situation on solid footing.

It’s not all about returns on investment. The greatest value an advisor can add is in these seven areas of financial planning:

Values: An advisor can work with you to identify your values ​​and what is most important to you. Do you want to leave a legacy for your children? Do you want to own two houses one day? Want to make sure you don’t run out of money before you run out of time? Once your advisor understands your values ​​and priorities, they can ensure that your financial plan is aligned with your long-term vision and determine whether or not you can financially afford your vision.

Access to investment: Larger advisory firms may be able to offer you investment options at a lower cost than you could get on your own, as well as access to tough, well-rated, hard-to-reach managers who may be closed to new investors. If an advisor charges you 1% of your assets each year to manage your money, all told, you can recoup up to half that amount in lower total costs.

Asset allocation strategy: An advisor’s fees should include the creation of an asset allocation strategy tailored to your individual goals and risk tolerance. Asset allocation is the process of allocating your assets between different types of investments, such as stocks, bonds, and cash, and has the greatest impact on your investment results. You receive value when the advisor monitors your account and manages any future adjustments to keep this allocation strategy on target – either quarterly or annually. This can save you valuable time.

Retirement planning: Many investors don’t understand the different ways various retirement-focused accounts can be used in income planning: 401(k)/403(b), traditional IRA, Roth IRA, income scales, annuities, or taxable accounts. When an advisor helps you diversify your tax exposure — which should also be included in their annual fee — you may be in a better position to make your money last longer in retirement.

Asset protection: Once you have accumulated financial and other assets, you need to protect them from loss. An advisor can help you arrange various types of insurance, including property and casualty, life, liability/umbrella, and special policies or endorsements to cover valuable artwork or collectibles .

Coherent tax strategy: Probably half of the tax returns we review each year show that taxpayers are claiming the wrong amount for qualified charitable deductions (QCDs), especially if they pay them directly from an IRA. And many don’t understand the different tax treatments that apply to 401(k), traditional, or Roth IRAs or taxable accounts — or how to diversify their tax exposure. Advisors can help you decide when to take Social Security benefits or Required Minimum Distributions (RMDs) — which can be surprisingly complicated, depending on your situation.

Estate and gift planning: A full-service consulting firm should be able to guide the creation of your estate planning and gifting strategy – with input from your lawyer and tax specialist. This includes creating trusts to efficiently pass on your wealth to future generations, or to distribute gifts of cash or securities to loved ones or favorite causes in a tax-smart way.

Comprehensive planners will be able to address all seven areas of financial planning.


If you’ve decided that working with an advisor might be helpful, it makes sense to interview two or three candidates before making the hiring decision. If you know a trusted friend or family member uses an advisor and has had a good experience, ask for a recommendation. As part of your search, you should evaluate each candidate using these criteria:

• Can you have a conversation with this person? Are they listening to you? Did they seem to care about you?

• What is the advisor’s experience and expertise? Has it been through at least one recession? Does it focus on a specialty, like retirement planning, or is it more of a generalist?

• What is their training and qualifications? Is it a Certified Financial Planner (CFP), Certified Financial Analyst (CFA), or Certified Public Accountant (CPA)?

• Finally, pay attention to how the advisor is remunerated. While both a Registered Representative and a Registered Investment Advisor (RIA) are legally bound to work in your best interests, how they are compensated will tell you a lot about their financial allegiances. It’s always a good idea to do a background check on the FINRA, SEC, or CFP Board websites.

A great advisor should be able to demonstrate their value time and time again in a number of areas of your financial life.

The opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations to any individual.

Bruce Helmer and Peg Webb are financial advisors at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at [email protected] Securities offered by LPL Financial, member FINRA/SIPC. Advisory services offered by Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.