What Is A Financial Adviser?

What is a financial adviser and why do you need one as a high net-worth individual?

Everyone has different financial goals, depending on the stage of life they’re in. While thirty-somethings might be focusing on paying off student loans and becoming a homeowner, someone in their early sixties will have different needs.

Perhaps they’ll be getting ready for retirement, planning to downsize to a smaller home, or looking to maintain their generational wealth and minimize estate taxes. With this in mind, how does a financial adviser play a role in these different, yet equally important goals?

A great financial adviser is someone that can help you plan for different life stages. They’ll take your goals of wanting to buy a home, sending a child to college, or protecting your wealth and show you how to achieve it. More importantly, if you want your wealth to last generations and minimize tax losses, it is extremely important to have a plan in place.

Without a financial planner, the goals you have might seem out of reach. However, with careful planning and help from a credentialed professional, you can meet your financial goals in both the short- and long-terms.

But how does a financial adviser specifically help someone that is a high net-worth individual? As a person with a portfolio of $5 million or more in investable assets, you’ll have different goals and concerns about your finances. Unfortunately, no matter what level of success you’ve achieved, there’s always concern about the future.

There are financial adviser firms that specialize in working with high net-worth individuals. But why should you work with one of these firms specifically, instead of with a financial professional that works with a range of different people? It really all comes down to understanding your needs as a client.

Those with high net-worth usually have different priorities than people at similar ages in their lives that have less wealth. While saving for retirement is often a concern for most, high net-worth individuals are instead more likely to worry about protecting their wealth for their future.

You might be concerned about whether you have enough to maintain your current lifestyle, pay for high healthcare costs in the future, and how you can leave a significant inheritance for your children and your grandchildren.

It’s for these reasons that it’s best to work with a financial adviser that understands your unique goals as someone that controls a multi-million dollar investment portfolio. And there are several diverse ways that a financial adviser can help you reach your goals.

Are you looking to manage an ultra-high net worth estate? Get your free copy of The Art of Protecting Ultra-High Net Worth Portfolios and Estates: Strategies for Families Worth $25 Million to $500 Million while supplies last.

Understanding financial adviser roles and how they can help

Financial advisers do more than just help you purchase investments and manage your wealth. Understanding financial adviser roles and the many hats advisers wear to help you succeed financially is vital to a successful relationship together.

To build a solid relationship with you and know how best to help, financial advisers should start as researchers and educators. Here are several things that financial advisers will do for you:

• Learn about you and your family’s unique financial situation before making a specialized plan.

Before any financial management begins, your financial adviser should get to know you and your current situation. They’ll take a snapshot of your financial well-being and look for areas of opportunity.

Together you will talk about how much money you earn annually, how much you’re able to save, how much you have in an emergency fund and whether you have insurance. Even estate planning topics such as whether you have a will or trust fund established, as well as how you’re reducing your tax liability will be common areas of discussion.

• Explain how you should go about reaching your financial goals.

After learning about your financial foundation, it’s time to switch over to more of an adviser role. Your adviser has taken the time to learn about your assets, liabilities, and whether you’re meeting your goals of planning for retirement or passing on wealth to your loved ones. They’ll understand the areas of opportunity that are available for you, depending on the stage of life you’re in.

Younger adults might turn to their adviser for information on sticking to a budget each month and growing an emergency fund. People at later stages in life however might be more concerned with how to lower their tax liability, plan their estate, and achieve greater results from their investment portfolio.

Are you ready to find a financial adviser that will help you succeed? Schedule your free consultation with Pillar Wealth Management, LLC.’s co-founders Hutch Ashoo and Chris Snyder and discover how we can help.

Examples of financial adviser tools they’ll use to understand your finances.

One of the best tools that a financial adviser uses to learn more about your financial picture is a questionnaire. It will give your adviser an accurate snapshot of your finances at that moment.

This helps them plan your finances in several ways. First, they’ll know the exact income you earn per year and get to understand the way you typically spend and save money. Using this information, they can make projections that determine if you’re on track to reach your goals, or whether there need to be some changes with how you handle money.

Second, a questionnaire shows how you currently invest and whether you’re assuming the appropriate amount of risk. Information your financial adviser collects will help them decide what kind of risk tolerance you can assume and determines the optimal asset allocation necessary for achieving your goals.

By learning your risk tolerance, your adviser can establish investment account strategy. For example, those who are conservative will focus more on preserving their capital rather than growing their wealth. Alternatively, someone with an aggressive risk tolerance typically seeks investments that can maximize returns, while also taking on risk that may lead to significant losses.

A moderate risk investor sits somewhere in the middle, and they’re willing to take some risk to achieve a higher return than conservative investors usually achieve.

Another benefit of the financial adviser’s questionnaire is that it covers other products that are a crucial part of financial management. Those who are newer at investing and managing money might not consider having insurance or creating an estate plan.

A financial adviser can use this questionnaire to not only make you think about work that your adviser specializes in but can also use it to grow your financial planning team. Based on the information you provide, your adviser may suggest other financial specialists like insurance agents, attorneys, and accountants, who can help you with all financial situations you face.

 

Understanding financial adviser financial plans

Other examples of financial adviser tools include your custom financial plan. This tool is one of the main reasons why financial advisers are so crucial to your long-term success.

They’ll compile information from your conversations, your risk analysis report, and your questionnaire to build a roadmap for you to follow. It will also include specific details about your income, current assets, and much more. Essentially, it works as a guide to help you see where you are now as well as where you want to be in the future.

Your financial plan will be a comprehensive document that provides essential information concerning your wealth. It starts by looking at your net worth and whether you have more assets than you owe in debt. It also outlines your cash flow and shows whether your monthly spending exceeds your monthly income.

It essentially helps you know whether you’re moving in the right direction of accomplishing your goals. It even helps explain the steps you should take to maximize your results, whether that’s by saving and investing more for retirement, reducing your tax liability by performing the right actions, or protecting your wealth to provide for your future generations.

Are you looking to improve your investing results? Receive your copy of Improving Portfolio Performance: The Shifts Multi-Millionaires Must Make to Achieve Financial Security and Serenity from our team at Pillar Wealth Management, LLC.

How financial advisers help you follow through your investment plan

As effective as they are, plans alone do not guarantee success. Instead, your plan must be followed up with action. This is another important role of a financial adviser.

They can offer comprehensive wealth management services or meet with you regularly to ensure that you’re taking care of the financial management steps needed to achieve your goals. The level of service that you receive from your financial adviser depends on how you would like to manage your investments.

If you prefer that your financial adviser handles the management of your investments, then they’ll take your financial plan and find asset classes for you to invest in.

They’ll make decisions based on your risk tolerance and diversify your investments to achieve the level of growth or the preservation of wealth that’s best for your individual case. This is usually the best level of service for high net-worth, who often have complex financial situations and require comprehensive management of their investments.

Examples of financial adviser portfolio monitoring services

Alternatively, your financial adviser can play more of the role of a financial coach that helps you plan your life, without being directly involved in the management of your portfolios. If this is the case, you’ll meet regularly with your financial adviser to review changes in your financial wellbeing.

This level of service usually isn’t the best for high net-worth individuals, as it’s much easier to let one representative or firm build your financial plan and manage your investments. However, this level of service does result in cost savings. Thus, there are tradeoffs to each level of service you can expect from financial advisers.

How are financial advisers compensated?

There are several ways that financial advisers earn compensation. Likewise, there are financial adviser pros and cons to each compensation method. First, there are some advisers that work on commission. Whenever they sell a financial product to you, they’ll receiving compensation. Consider a stockbroker for example. Once she places your investment order, she’ll earn a fee.

Second, there are advisers that are a combination of commissions and fees. These advisers generally offer certain services, and they’ll earn a commission when they create a financial plan for you, as an example.

Third are the advisers that earn a salary. You may end up paying their firm a commission, and the adviser might be paid a salary and any performance bonuses.

And finally, there is fee-only compensation. Let’s discuss this form of compensation and share fee-only financial adviser pros and cons.

Fee only financial adviser pros and cons

One of the best ways to pay for a financial adviser is with a fee-only model. One potential con is that it might cost a little more cash up front, but it can lead to better results. There’s a reason for this. Usually, companies that are fee-only work as Registered Investment Advisers and have fiduciary duty to you.

This means that they’ll only suggest financial products and services that are appropriate for you. Thus, you won’t have to worry about a financial adviser making a recommendation that only serves to earn him or her a commission. The more money you have, the more they will make in compensation, aligning incentives.

How to find financial adviser near me?

If you’re wondering how to find financial adviser near me, consider starting by speaking to your family members and friends. If that doesn’t lead you anywhere, ask other people you know and work with for suggestions.

Another simple method for finding financial advisers is by using online search engines. And if all else fails, you can always contract financial advising firms outside of your local area and ask if they have any suggestions on how to find financial adviser near me.

There are many different financial advisers available to help manage your money, investments, and assets. But how do you find one that will match your needs? If you’re searching for a financial adviser and you have more than $5 million in investments to manage, then register for your free consultation.

Our team at Pillar Wealth Management, LLC can help grow and protect your investment portfolio. And for any reason if we’re not certain that we’re the right firm to meet your needs, we can point you in the right direction.

Find the right financial advisers with the skills needed to manage a multi-million dollar portfolio. Visit this page to schedule your meeting with co-founders of Pillar Wealth Management, LLC., Hutch Ashoo and Chris Snyder.