Why Everyone Needs a Financial Advisor

                                                                  

If doesn’t matter if you make $20,000 or $2,000,000 a year, everyone needs help with managing their money and meeting their financial goals.  You can use self-help resources such as books, television shows, seminars or courses but you may reach a point where you need additional help, that’s when a financial advisor comes in handy. 

If you do not have a financial advisor you should consider hiring one as your income increases, lifestyle changes occur such as marriage and children and assets increase such as purchasing a home, investment property or starting a business.

Financial advisors help clients reach their financial goals including retirement, paying for college education or starting a business.  Some financial advisors can also assist with creating a budget or spending plan, paying down debt, choosing investments, managing their finances, taxes, savings and wealth management.

There are 2 types of financial advisors:  fee-only and commission-based.  Fee-only advisors charge a fee for their services usually $150-$300 an hour or per session or may charge a fee based on the annual percentage of assets that are managed. Fees should be disclosed up-front. Fee-only advisors offer unbiased advice because they are not motivated or required to sell products and services to get paid.

Commission-based advisors receive a commission by fund companies or brokerages for the sale of financial products and services and receive a percentage of the total amount clients invest in specific products.  Commission-based advisers receive a percentage of the total number of transactions a client makes and may charge 0.5% - 2% of the assets they manage for each client.

A financial advisor can:  help you generate more money for you and your family, help you to be better prepared for changes in your life (death, illness, layoff, children, etc.), provide protection against mistakes and unexpected circumstances (death, illness), provide stability and peace of mind by ensuring your financial goals are met, save time, provide guidance on retirement and investment options, decrease your tax liability, determine insurance needs, minimize taxes, analyze risks, and develop a plan to manage your business finances. Here are 16 reasons to hire a financial advisor:

1. If you have $300,000 or more in investments.
2. You have a lump sum of money to invest.
3. You want to retire early, start a business or do volunteer work in another country.
4. You want to setup investments accounts to fund college education or other expenses for family members. However, you should contact an estate attorney to setup trusts of similar types of accounts.
5. You want to learn how to track spending.
6. You need help to create and meet financial goals.
7. You want to plan for retirement.
8. You want to address credit issues.
9. You want to develop good spending habits.
10. You want to organize your finances.
11. Getting married or getting a divorce.
12. You experience a financial crisis.
13. You buy or sell a home or investment property.
14. Death of a spouse.
15. You want to donate a large sum to charity.
16. You want to analyze your insurance needs.

Tips for Investing in 2009

Many people are asking for advice from friends, co-workers, family members, strangers and their financial planners about what they should do with their investments or retirement plan. Many people panicked and spent all or a large portion of their retirement money or moved their retirement money to a savings account, CD or hid it under their mattress.

Every investor has different financial goals and objectives and should work with a financial planner to assist with meeting your goals. Financial planners have expertise in how to survive the ups and downs of the stock market and can provide the best advice and if and when you should move your money. Here are 7 tips to help you invest your money in 2009.

1. Diversify. If you have all of your investment in one area, re-allocate your investments to at least 3 areas to minimize losses.

2. Review. Review your financial goals with your financial planner at least once a year to ensure you are on track to meet your goals. Also, check your statement for any errors and notify your financial planner immediately.

3. Loan. If you plan to take out a loan on your retirement plan or sell shares of stocks, consult a tax professional and your financial advisor to determine what options you have to minimize losses and taxes and ensure you will be able to continue to meet your financial goals.

4. Time. Your money cannot grow if you take it out too soon. It is the timing in the market, not the timing of the market. It takes a minimum of 5 years to see a significant return on your investment. The rule of 72 states that it takes at least 72 months for your money to double so be patient.

5. Don't panic. Don't panic and get overwhelmed by the media, fear, anxiety and nervousness of those around you. Stay calm and follow the plan you have setup with your financial planner. Don't torture yourself by checking the stock market everyday or checking your retirement account balance every week or every month. Don't let emotions cause you to make bad decisions.

6. DRIPs. To offset any losses you may have experienced you can purchase a Dividend Reinvestment Plan (DRIP) or use it as an easy way to start investing.

7. Buy now. The motto is "buy low, sell high" is truly appropriate during this recession. This is a great time to buy stocks or to invest in a mutual fund. When the market bounces back you will have achieved great gains.