Myth: Financial advisors only want to manage your money.

Younger professionals may need help fully understanding how financial advisors work with their clients. A lot of young professionals automatically think that a financial advisor is someone who manages investments and focuses on retirement, but this is merely one aspect of financial planning. 

Let’s start with what we are not. A large majority of us are not ones to tell you what microcap stock we think will outperform, sell you unnecessary commission-based products, or act in shady manners with our interests ahead of the client’s. We are held to the fiduciary standard, and we work to provide comprehensive financial advice to clients. 

It’s easy to think that a financial advisor is only concerned with your direct finances or the assets that you have accumulated. There are investment advisors and people that solely focus on your investments. But most of us are planning forward advisors, even letting people know that the majority of our value is derived from comprehensive planning. While investing and everything that goes into it is a piece of the puzzle, it is not nearly our only focus. Want proof? Here’s how the CFP® Exam breaks out by subject.

Might be less than you’d think for a financial advisor, no? That’s because our expertise goes much further than portfolio allocation and asset location.

Essentially, anything that could potentially affect your financial life we want to talk about, provide guidance, and work alongside you. Here are the 6 broad aspects of planning that a financial advisor should be covering during a comprehensive engagement: Cash flow analysis/liquidity management, investment analysis, retirement planning and projections, tax planning, insurance planning, and estate planning. (I plan to give much more insight into each of these areas and how they affect young professionals in future pieces).

These 6 areas of focus serve to show just how in-depth a financial plan can go; it is much more holistic than recommending a specific stock or managing a portfolio. 

Retirement planning is another misinterpretation of what a financial planner does. So many people think that financial planners are only concerned with clients achieving the goal of retirement. This is such a small aspect of working with a financial planner and retirement may even take a back seat as a goal for many young clients.

People are concerned with their student loan debt, purchasing a home, and having children, which are all financial goals or life events that may take precedence over retirement. Especially when working with young people, there are tons of financial goals to be achieved along the way to retirement that it may not even be the majority of the focus in a planning engagement.

Financial advisors can provide a certain level of clarity, organization, and optimization when it comes to your financial life, not just your investments. I have seen so many people absolutely stunned at the value they receive from their planning engagement, even more so when they previously worked with someone who managed their investments but had no clue what their actual financial life looked like. It seemed appropriate to clear up exactly what a financial advisor or a CFP® Professional can do for you.

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Have a more specific question or want to get your finances in order? Feel free to reach out to [email protected] for a free consultation!