Why Financial Advisors Are Still Important
With the rise in popularity of financial planning robo-advisors, many experts predicted the beginning of the end for financial advisors. But as many investors are starting to see, there are distinct advantages to having a knowledgeable and trusted advisor when determining just how you should invest your money.
While robo-advisors can be a good solution for those with limited funds who want to get their feet wet in the investment arena, the lack of a personal relationship, the lack of understanding your unique goals, and the lack of advice for your specific situation can prove to be detrimental.
There are other reasons why using a financial advisor is a good idea. Here are a few of them:
- If you want to have someone you can call when the market drops, when you are considering refinancing your home, or want an educated opinion on the next outperforming stock sector, then having a financial advisor is key. A financial advisor can be particularly important when just starting to invest, as they can help you identify your goals, help you understand what risk is reasonable for your circumstances, and help you look at the near and distant future. With a full understanding of your situation and goals, a financial advisor can help you devise a plan to get you where you want to be financially and help you deal with bumps along the way.
- You want to be involved in the investment process. Robo-advisors tend to be more of a one-size-fits-all solution, which may be great if you happen to match the profile for which with the Robo-advisor was created. However, as you become more knowledgeable about investing, you discover that investments tailored to your situation and goals may work better for you, and having a financial advisor to assist you in creating your investment approach and selection can make a huge difference.
- Financial advisors spend their time watching the market, doing research, and keeping track of trends. If you want to be successful in understanding investments, spend some time with a professional that has the financial expertise you need. Yes, your brother-in-law may have a head for stocks, but he likely doesn’t have the credentials or diversity of experience that a licensed financial advisor has. Similarly, online articles about what stock it hot or how to best invest your money can provide helpful background, but acting on general advice often is not the best or most efficient path toward achieving your unique goals.
- Your money is currently resting in a low-interest savings account and you have no idea how to start investing. Here is another area where a financial advisor can shine, guiding you through the initial creation of a financial plan that suits both your income level, your personality and your goals. A financial advisor can also help you create an investment approach and perspective to help you avoid making emotional decisions when looking to invest.
- Financial advisors have access to a variety of tools and resources that help them perform their job better, in the process, providing you with the latest information on stocks and other investments that are not necessarily accessible to the general public. In addition, most financial advisors are part of a team, giving you accessibility to a wide variety of expertise when investing.
If you’re still unsure, you can take a look at a hybrid model, which provides you with access to robo-advisors as well to a financial advisor if you have any questions. You can also start with a robo-investor and later move to a financial advisor as your investments grow or you have more income to invest. Either way, the financial advisor can play an important role in your wealth creation and management.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2020 Advisor Websites.