1. True comprehensive financial planning can be hard to book-learn
Comprehensive financial planning isn’t just investments. When done right, it includes and integrates insurance, retirement planning, taxes, and estate planning. And while there are shelves full of books on personal finance, it’s unlikely that there’s one written for your unique set of circumstances. And for better or worse, the rules of the game change: tax and estate laws aren’t set in stone. Professional financial planning incorporates academic theory with real-world implementation. It’s not as simple as reading a lot of investment books, subscribing to popular financial magazines, or relying on a family friend that’s tangentially in the financial industry. Look for a firm, like ours, that has decades of experience and that can holistically review and integrate the various aspects of your financial lives.
2. You may not have the time or energy, and even if you do, you would rather spend it on something else
If you’re working, you’re likely too busy with other aspects of your life – your job, your family, your community, your hobbies. There’s an interesting oft-cited statistic that most working families spend more time planning their annual vacation then they spend on their finances. Why not hand off your financial planning to a professional?
If you’re retired, you probably have a lot of projects going on – travel, hobbies, family and perhaps some volunteering or part-time work. Even if you do have the time, is keeping up to date on all matters financial the way you want to spend your golden years?
3. It’s hard to achieve perspective when you’re in the eye of the tornado
Let’s assume that you are a quick study in all the areas of financial planning and that you have the necessary time to dedicate to financial planning for your household. You still may want to retain a financial advisor, simply because you’re too close to the situation and can’t take an objective view of matters. Maybe it’s inertia or “paralysis by analysis.” More than once, we’ve had clients tell us that they knew what they were supposed to do, but just couldn’t pull the trigger without having someone to be accountable to. A financial advisor can act as another set of eyes to help you see things that you weren’t able to see on your own, as well as serve as a sounding board for ideas and questions.
4. Life can be better when you’re the CEO, not the analyst
Working with an advisor doesn’t mean you aren’t part of the process. But it does mean that you take a CEO-approach to your finances: your advisor does the legwork to provide you with well-researched options, and together you make an informed decision. You’ll be looking to your advisor for ideas and second opinions, for detailed analysis, for comparisons and alternatives, and for prudent counsel, while you spend your time focused on your other projects and pursuits.
5. It may help preserve marital harmony
John Lynch, the director of The Center for Research on Consumer Financial Decision Making was recently quoted as saying that couples often have to “divide and conquer” when it comes to managing tasks as a household. While this may be more efficient, Lynch describes this approach as “super risky.” The statistical data indicates that the partner who is responsible for handling the finances tends to get exponentially better at it over time, while the partner who is not involved actually loses financial literacy. The less financially experienced partner can then be left in a difficult situation when their spouse either passes away or leaves the relationship due to a divorce. Working with a financial advisor can help keep both spouses involved in the household’s financial matters, but there’s another benefit…
As we all know, spouses don’t always agree on financial decisions. Advisors can provide a neutral and open environment for spouses to discuss their financial concerns and ideas. After all, you may not always agree 100% on your finances, but you still want to sit down and enjoy dinner together.