5 Areas Your Financial Adviser Should Offer Help

Impact Planning |

Financial advisers’ role in the lives of those they try to help has evolved and unfortunately the role hasn’t always been seen in a positive light. Many of us in the industry work tirelessly to ensure that the profession continues to have credibility, integrity, and transparency. All of the varying titles or companies can thoroughly confuse the masses so I try to tackle what to hire for when searching for the perfect financial adviser.

First, let’s define the different types of financial advisors/advisers. There are essentially two broad categories:

Registered Representatives (Advisors): these folks have licensing to sell certain products/investments such as mutual funds, variable annuities, stocks, bonds, etc. and are subject to a “Suitability” review meaning that what they sell must be suitable for the individual in which they are selling.

Investment Adviser Representatives (Advisers): these folks are subject to a “Fiduciary” standard and must act in the best interest of the clients they serve. They receive fees based on the advice they give, not commissions on the products they sell.

Either type of adviser could be a good fit but keep in mind that it’s important to have someone looking out for their clients’ best interest, not simply what is suitable. When is comes to the types of services they provide, here are some high-level areas they should be focused on for their clients:

  • Investment Consulting and Management—this is what most traditionally consider when they think of an adviser but keep in mind this is one small piece of the puzzle. They should take client investments into consideration regardless of whether those investments are actually under the adviser’s management. He/She should understand your risk comfort and help invest appropriately.
  • Goal Planning—conversations with your adviser should always include your ultimate goals whether it be retirement, buying a house, or switching careers. Nothing in an individual’s financial future can be planned for without knowing what it is he/she ultimately lives for.
  • Cashflow Planning—one of the many levers of a financial plan includes income vs. expenses and how that is managed day-to-day. Your adviser should be helping monitor this and providing tools to understand these trends more readily.
  • Estate Planning and Legacy—while this topic isn’t nearly as popular as others (for obvious reasons), it is important that an adviser help with wealth transfer planning by ensuring beneficiaries are up to date across all accounts and helping to coordinate appropriate legal documents such as wills, power of attorney, and living wills that are executed by the services of an estate attorney.
  • Tax Planning—as part of any financial plan, tax planning should be considered to optimize the overall picture. This could be as simple as providing guidance on how much to contribute to a 401k to tax-efficient investing, always in conjunction with a tax professional.

At the end of the day an adviser should be an “on call partner” to their clients, helping them determine how to make the right decision when life events arise. Not everyone needs every single one of these services at once but over a lifetime, all of these will come into play. The bottom line is: as you’re searching for the right person, make sure you understand their offerings and find the person that is going to look out for ALL of your needs. I believe advisers who only manage assets are becoming more and more obsolete—it’s all about the comprehensive planning.