When you’re young, your primary responsibility is to take care of yourself. As time passes, that picture tends to change. You may be responsible for a spouse or partner, a family, your job, extended family members – you get the picture. As time goes by, your life can get pretty complicated.
It’s no different when it comes to your financial life. As you start accumulating money you may hire someone to manage it for you. As your responsibilities grow, your need for advice grows beyond needing just investment advice. It can be really difficult to know when you need more advice than a money manager can offer.
One of the obstacles you may face is determining the services a financial professional will perform for you. Many money managers use the term “advisor” as a means of appealing to the broadest number of potential clients. Unfortunately, the title a financial professional uses may shed little light into their competencies or service offerings.
Over the last couple of decades there has been an explosion of credentials that financial professionals can use. While there may be a need to recognize increased specialization in certain areas, suffice it to say that the more professional credentials there are, the more difficult it is for the public to understand what they mean, and where they should go for advice that will add value to their lives.
So how do you know that you need more advice than your money manager can offer? If you have a business or practice and need guidance on succession planning, or how to extract more value from selling your business, an advisor can help. Looking for more advice than whether you can afford to retire? Have you considered whether you are retiring FROM something rather than TO something? Are you questioning what you will do with all of that free time? Helping you to find answers that are right for you is counsel an advisor can provide.
There are people who ask ‘why do I need an advisor?’ I have a money manager who makes me money. I have an accountant who keeps me from paying too much money in taxes. I have an insurance agent who tells me how to protect my money, and I have an attorney who helps me codify how I will pass along my money when I no longer am walking the Earth.
This point of view reminds me of position coaches in the NFL. They are important, however, they need coordinators on both sides of the ball to develop strategies for each opponent, which is then overseen by a head coach. An advisor can help to ensure that all of your other professionals are up to date on what’s going on in your life, so they can best serve you.
Attorneys and accountants tend to be dominated by deadlines or client concerns that require immediate attention. The better ones are always in high demand. Despite their best intentions, it can be unrealistic to expect a call from your attorney to update your estate plan, or your accountant inquiring about the status of your stock options.
There are a range of tools and strategies that your team of professionals can suggest to implement your plan. An advisor can help you to choose the most cost effective, and time efficient strategies to meet your needs.
Isn’t an advisor going to cost a lot more than a money manager? Actually, you will likely pay the same, or sometimes less, for the services of an advisor. In the end, the question of whether you will be better served by an advisor comes down to one of value. Are you receiving enough value from the fees you pay your money manager? It’s a question worth pondering.