Think of a financial advisor as a trusted agent who acts on your behalf. They can help you avoid The Big Mistake – a blunder that can derail your financial goals. This can include anything from sinking a lot of money into a “sure thing” to paying unnecessary taxes.
If you sell property or a business, receive an inheritance, or manage to save a significant sum, you will want to know how to invest your money wisely.
During your early working years, you may see little need for a financial advisor. Your questions about investing may concern two things:
- How much should I put away in my employer’s retirement savings plan?
- Which funds should I choose?
As you approach retirement, you will have a lot more questions. You will need to figure out how to replace income from your job. You will want to be careful so that you don’t take unnecessary risks or pay too much in taxes.
Why Do People Hire a Financial Advisor?
People look to a financial advisor for help with questions like these:
- How do I choose from among all the investment possibilities there are?
- How can I create a stream of income to live on?
- How much money can I safely withdraw each year for living expenses?
- How can I get ongoing help with financial planning?
What Does a Financial Advisor Do?
Financial advisors and financial planners are specialists who help their clients clarify their goals and work toward them. (Note that we use “financial advisor” and “financial planner” interchangeably here.)
Functions of an advisor include creating a financial outline or plan, managing investments, helping avoid unnecessary taxes, and answering personal finance questions as they arise.
A financial advisor can also coordinate with your tax and legal advisors to make sure that your wishes are being fulfilled. They are in a good position to see that you have up-to-date documents related to powers of attorney and beneficiaries.
Are Advisors Pretty Much the Same?
There are differences among financial planners. Some have no formal training, while others may have earned recognized professional designations.
Planners also differ in the way they are paid and in whether they choose to outsource investment management or do it in-house.
Professional Qualifications.
There are professional designations that indicate that an advisor has gone through rigorous training and has agreed to abide by a specified code of ethics.
Three well-known designations are Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and Chartered Financial Consultant (ChFC).
How Financial Advisors Are Paid.
Some advisors create plans or provide guidance in return for an hourly fee. Often, these advisors will also sell financial products and investment management services.
Other advisors, like us, are paid a recurring management fee that is based on the total assets they manage for clients. They have an incentive to see your assets grow.
Do They Outsource or Do the Work Themselves?
Another key difference among advisors is in how they manage investments for clients. Many will help develop a financial plan but will outsource day-to-day investment decisions to others.
A smaller number help develop a financial plan and perform investment research and management in-house. This is the approach we take at America First Investment Advisors.
How to Select a Financial Advisor in Omaha?
Nothing beats the recommendation of a friend who has first-hand experience with an advisor. Absent that, there are several articles online that review financial advisors in Omaha.
Once you’ve found a few to speak with, you may want to know the key questions to ask. The internet is full of standard questions to ask, but we have a post entitled “10 Better Questions to Ask Your Financial Planner in Omaha” that offers a way to get more insight.
