Managing wealth is of course the most important reason to hire a financial advisor, but the reality is that professional help when it comes to managing your funds can go beyond what's on the surface. Your advisor may help you out perform the stock market, but acquiring wealth is not the same as keeping it. What happens down the line when you need to care for aging parents or put a child through college? These are all questions no one seems to want to answer or even think about.
Your advisor can push your limits and make you think of all of the possible circumstances in your life that may impact your funds. Unexpected emergencies in the family or a sick child may impact your ability to keep up appearances. Not to mention, the dreaded question no one wants to answer is; what happens if I lose my job? You may be doing good at work as of right now and you can make smart financial investments, but losing a job can cause the world you've built for yourself to come crashing down.
Here are some things a financial advisor can help with:
Your advisor can push you to create a financial plan for your future. Most people put off doing this because they get comfortable and they simply don't see the need. Much like budgeting for groceries, a financial plan sets in motion your spending habits for the future.
When it comes to making investments, you have biases that prevent you from taking positive risks or pushing you to take big ones. It has been proven that women live longer and aren't exactly risk takers, but that's not necessarily the way to financial freedom. An advisor can help with risk taking and push you out of your comfort zone, but not without giving you a levelheaded opinion to help way your decisions.
Investment portfolios are risky in and of themselves, but many people make the simple mistake of putting all of their eggs in one basket. Basically, it means that investing in only one type of stock can cause you to lose everything. Your advisor forces you to take a look at your investment portfolio with a critical eye and consider where you can improve it. Playing it safe in your mind is never really safe because so many outside factors can contribute to your financial downfall.
When the economy gets tough, it can be hard to face facts. You may have dealt with financial crises in the past, but time tends to make it all fade. An advisor can give you advice when the market isn't as strong as it once was and he or she can prevent you from making mistakes that may prove to be costly.
There are numerous reasons why a financial advisor can make a difference in your investment habits, but it all comes down to selecting the right advisor. If you choose the wrong help, it can end up making things worse!