How to Use Your Financial Advisor

A financial advisor is a professional who helps you manage your finances and investments, teaches you about important options and aids you in making smart decisions toward your overall financial goals. But did you know that in order to maintain their license, your financial advisor must pass a rigorous national examination and complete ongoing educational requirements annually? Certified Public Accountants (CPAs), Chartered Financial Analysts (CFAs) and Certified Financial Planners (CFPs) must adhere to a strict code of ethics and work in the best interest of their clients, disclosing any conflicts of interest. These advisors must act as a fiduciary, and typically are paid solely from client fees and do not sell products. They truly value their relationship with you, the client.

How else can a financial advisor help me?  

  • Community connections - Many advisors are well connected in their communities. When a client has a need that may be outside of their advisor’s direct service offerings, the advisor may be able to help.
    • For example, often as part of a financial plan, a client may need to develop their estate plan or obtain insurance. A good advisor will have a referral system to help the client find a suitable attorney or insurance agent and will also serve as an objective resource to help the client get what they need. Perhaps real estate buying or selling is in the plan. There are many aspects of real estate, and the advisor can help find someone who deals with their specific real estate need. A good advisor can help clients review their employee benefits to make good choices, as well.  
  • Tax preparation - Some advisors may be CPAs and prepare taxes, but those who don’t will often coordinate with their client’s CPA to do tax planning and advise on strategies for the client to maximize their tax benefits and avoid missteps.  
    • For example, rather than selling a highly appreciated stock and pay taxes on the gain, a client could donate the appreciated stock to charity and get a tax deduction for the full amount instead. Clients should ask their financial advisor to help estimate income from investments that may help determine any estimated tax payments due to avoid penalties for underpaid amounts. Advisors may be ahead of the game with new laws to help clients plan all year long.
  • Investment assistance - Investments can sometimes be daunting for clients. A good advisor will provide guidance on how a client should be invested based on their risk tolerance, time horizon and liquidity needs.  
    • Based on mutual understanding, the advisor will manage their portfolios in line with the client’s goals and needs. They may also review plans with employers to make sure they are making the best choices there as well. For managed portfolios, regular reporting and meetings are typical.
  • Well-informed advisor - Advisors often belong to organizations that exist to provide ongoing education, resources and networks that benefit not only the advisor, but their clients, too. They spend time and money on tools, licensing and education to provide clients with the best advice and information available.

So, when you are pondering many of life’s challenges, tap into the resource that is there to serve your needs and help you reach your goals — your fee-only financial advisor. It could take a huge load off your shoulders.

This blog relates to fee-only advisors who are Certified Financial Planners, CPAs, and/or Certified Financial Analysts.

 

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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