The Stock Market Is Up: Why do I Still Need a Financial Advisor?

The stock market continues to trend upwards. According to industry analysis it is expected to remain positive for 2017 and enter 2018 strong. This may have some people questioning why they still need a financial advisor. The truth is a good financial advisor may be the key resource between reaching your financial goals or spending your lifetime worrying about them. Below we’ll delve into a few reasons why people need a financial advisor — even when the market is up.

Stock Market Changes

There are many factors that can cause the stock market to fluctuate, some include:

  • An increase or decrease in consumer or business optimism
  • The normal ebbs and flow of economic cycles
  • Natural and global disasters

With stocks being a key component in an individual’s retirement portfolio, it’s important to be confident in your investment strategy. Typically, when the stock market is up, people are more inclined to invest and spend money in the local economy. When the stock market decreases, investors may think the best thing to do is sell. A financial advisor can help you decide whether to realign your portfolio, stay the course or take advantage of buying opportunities.

A knowledgeable advisor can provide the perspective to understand what is happening in the capital markets, why they may be changing and how it affects you. For example, if you don’t need to withdraw funds from your equity holdings in the near term, a change in price may be irrelevant to you. Equity Prices tend to revert to a long term average trend. Patience to wait out the downturn can be one of the most important investing virtues. A good financial advisor will look at the whole plan and advise you on not only the investments, but your other goals.

Define Financial Goals

Financial Goals include growing investment savings, but they also include many other things, like:

  • Managing your cash flow, your debt and saving the right amount for your future goals
  • Determining if your investment savings are properly diversified based on your appetite for risk, and when you will need to begin using your savings for living expenses
  • Looking at your insurance coverages to be sure they will support you in a time of need
  • Identifying the timing of financial needs such as college, retirement age, assisting family members, and charitable goals
  • Looking at your estate plan and setting that up properly

Monitor Financial Goals

After you’ve established your financial goals, you should evaluate them frequently to verify you are still on track. One thing we can be sure of is that things will change. Planning is essential but plans are useless if they are not reviewed regularly.

Knowing where you are in the timeline of your plan, such as when you will no longer work to earn a living, is essential when evaluating your investment accounts. Regular review of your accounts will also identify needs to change the amounts you own in each investment. For example, if you plan to leave the workforce within the next 2 to 3 years, you would want to be sure your investments are lined up to take care of your living expenses for the first few years without fear that a change in the markets will affect that. But as we all know, people are living longer lives and investments will need to work longer to support this.

Your financial advisor should work with you to stay on top of changes in your plans, the impact of changes in the economy and your savings on your financial plan.

In summary, with changes in the stock market, your financial goal planning and monitoring investments, it’s a good idea to have an expert on your side. A financial advisor can make recommendations for aligning your assets and financial decisions toward your goals. They can manage your assets, making recommendations and implementing changes based on your goals. Most importantly, a financial advisor can help bring peace of mind that you are on the right financial path for your life goals.   

Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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