Choosing an Advisor
Zoe Team
6 min read
Wealth advisors help those approaching retirement maximize tax and cash flow benefits.
Life changes like divorce or job promotions often trigger the need for professional financial oversight.
Even DIY investors benefit from advisors when time constraints prevent holistic tax and estate planning.
Consider an advisor if you are nearing retirement, experiencing significant life changes, lack time for portfolio management, or have complex income streams.
Yes, advisors provide holistic oversight, including tax harvesting and estate planning, which busy DIY investors may overlook.
You are likely ready if you have recognized a need for professional help and are prepared to bridge the ‘intention-action gap’ by taking concrete steps.
The idea that “you don’t know what you don’t know” applies to all of us, no matter our age, life stage, or intellect. When it comes to wealth management, it is difficult to know whether you should seek help from a professional or not. And we get that! So we have compiled a list of people that are the most obvious candidates for a wealth advisor.
As you approach retirement there is no time for a financial do-over. Whatever decisions you have made with your retirement savings will be what you have to work with. But, that does not mean that you can’t maximize the benefits from that. A wealth advisor can help you decide which investments to access first, and which to hold off on drawing from. This advice can help you from a cash flow and a tax perspective.
Losing a spouse, whether by divorce or death, can change everything when it comes to your wealth. In order to reduce the complications faced down the road, it is best to get professional advice on how to handle any sudden influxes of cash, changes in yearly expenses, changes to insurance policies, or overall changes in wealth goals. Give yourself the peace of mind to move forward, knowing that all your finances are in order and that you have created the foundation for the best situation going forward.
As a recent graduate or someone just starting out in their career, hiring an advisor may be a stretch too far. However, if you recently received a big promotion in which your annual compensation increased significantly then it is a good time to chat with a wealth advisor who can help you organize and allocate extra savings, help you avoid “lifestyle creep”, and guide you to more effectively grow your wealth. It’s also a great time to set up the basic structure of your financial life, allowing you to avoid the need for a “financial do-over” when things become more complex.
With technology as it is today, it is as easy as it’s ever been to invest your money yourself. And many people have the skillset to do so - very effectively. Unfortunately, DIY investors often find themselves without the luxury of time. Investing is time-consuming. Besides rebalancing, tax harvesting, dividend reinvestment, and risk management, it involves a fair amount of research and analysis even before any investing can begin.
DIY investors that find themselves lacking the time to adequately manage their investments should consider outsourcing some, if not all tasks, to an expert. An advisor can manage your investments for you, but more importantly, they can look at your wealth life holistically, and highlight areas that could use some extra attention. For instance, DIYs often overlook the component of tax planning when considering which type of investment accounts to allocate savings towards. In other instances, DIYs often don’t stay on top of who their beneficiaries are in different savings or investment accounts which can be problematic from an estate planning perspective. Your time is precious, make sure you are making the right decision about how you use it.
For those of us with a simple W2 income stream, investing through a 401(k) ourselves can be a simple and straightforward process. Things get a little more complicated when you have multiple income streams, foreign investments, or lots of deductions. If you find yourself in this situation, working with a wealth advisor will not only save you hours of your time but could save you dollars as well in the long term.
The decision to be self-employed is a big one. Not only could it mean that you have significantly less time on your hands, but it also means changes in a number of aspects of your wealth. Obvious changes include your tax structure as well as the need to consider how to manage employee salaries, taxes, and benefits. These can be complex issues that should be handled properly and efficiently from the beginning to avoid hassles down the road. An expert advisor can be invaluable during this time.
Whether it be getting married or having children, starting a family brings with it a number of personal finance considerations. A wealth advisor can be useful during this stage of your life, helping you to consider how to handle your taxes, how to combine incomes, plan for college, buy life insurance, or adjust your beneficiaries in your investments and savings accounts.
The intention-action gap is a term used in behavioral economics to explain why your new running sneakers remain unused in your closet, despite your lifelong desire to complete a marathon; why so many diets fail, and why it takes some people months (if not years) to hire a wealth advisor. The intention-action gap is the massive space in time between deciding what it is we intend to do, and actually doing it. Moira Somers Ph.D., a clinical neuropsychologist, professor, and executive coach, explains that only 20% of us are ready to bridge that gap. And we see this ALL THE TIME here at Zoe. Many clients know that they want to hire an advisor, they know why and are completely on board. But they are not ready to take action and actually hire someone. If you are ready to create immediate change to your wealth situation, then you are ready to hire an advisor.
Hiring a wealth advisor is a big deal. It is a decision that you should only make if it is 100% right for you. Understand if you are someone that could use professional help before you take the step to hire someone.
For examples of what financial help certain people need, check out our blog: Financial Advisors, the tell-all series: do I need a financial advisor?
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