These are portraits of Bruce Helmer and Peg Webb, financial advisors for the Wealth Enhancement Group and business columnists for the Pioneer Press.
Bruce Helmer and Peg Webb

Research studies have shown that people who use financial advisors perform better, on average, than those who do not.

There are several reasons. With so much information online and index funds offering cheap exposure to every corner of the investment universe, many investors think they can do it themselves. Some rely on computer models that automatically invest and rebalance portfolios without human intervention. Others are bombarded with information from every corner and don’t know who to trust.

How Financial Advisors Provide Added Value

People typically decide to hire an advisor when settling into a career, starting a family, or going through other major life events. With busy lives, many people find that they don’t have the time or the inclination to manage their own finances. Our financial advisors have the training and experience to put your financial situation on a solid foundation.

Return on investment isn’t everything. The greatest value an advisor can add is in his seven areas of financial planning:

value: An advisor will work with you to identify your values ​​and what is most important to you. Want to leave a legacy for your children? Want to own two homes in one day? Want to avoid running out of money before time runs out? Once your advisor understands your values ​​and priorities, they can ensure your financial plans are aligned with your long-term vision and determine if you have the financial headroom to achieve it.

Investment access: A large advisory firm may offer investment options at a lower cost than acquiring on your own. We may also be able to provide access to difficult, highly rated and hard-to-reach managers that may be closed to new investors. If an advisor charges his 1% of your assets each year to manage your money, you could potentially get half of that amount back in terms of total cost savings.

Asset Allocation Strategy: Advisor fees should include developing an asset allocation strategy tailored to individual goals and risk tolerance. Asset allocation is the process of distributing your assets among different types of investments such as stocks, bonds and cash, which has the greatest impact on your investment results. Gain value when your advisor monitors your account and manages future adjustments to keep that allocation strategy on target (either quarterly or annually). This saves valuable time.

Retirement plan: Many investors use a variety of retirement-focused accounts for their income planning, such as 401(k)/403(b), traditional IRAs, Roth IRAs, income ladders, pensions, or taxable accounts. I don’t understand the different ways it can be done. If an advisor helps you diversify your tax risk, that should also be included in the annual fee.

Asset protection: Once you have accumulated financial assets and other types of assets, you need to protect them from loss. Advisors can help you purchase various types of insurance, including property and casualty, life, liability/umbrellas, and special insurance and riders covering valuable art and collectibles.

A Cohesive Tax Strategy: Perhaps half of the tax returns we review each year show that taxpayers are not claiming the appropriate amount of Qualified Charity Deduction (QCD), especially if they are paying directly from an IRA. Also, many people do not understand the various tax treatments that apply to a 401(k), traditional or Roth IRA, or taxable accounts, or how to spread the tax liability. Your advisor will help you decide when you will receive your social security benefits or minimum required distributions (RMD). This can get surprisingly complicated in some situations.

Estate and gift planning: A full-service advisory firm should be able to help you develop your estate planning and gifting strategies with input from lawyers and tax professionals. This includes creating a trust to efficiently pass your wealth on to future generations, or to distribute gifts of cash or securities to your loved ones or favorite causes in a tax-saving way. It is included.

Comprehensive planners will be able to address all seven of these areas of financial planning.

How to choose an advisor

If you decide that working with an advisor would be helpful, it makes sense to interview two or three candidates before making a hiring decision. If you know a trusted friend or family member who uses an advisor and has had good experiences, ask for a referral. As part of the survey, each candidate should be evaluated using the following criteria:

• Can you talk to this person? do they listen to you? Did they seem to care about you?

• What is the advisor’s experience and expertise? Has she gone through at least one of her downturns and is she focused on one area of ​​expertise, such as planning for her retirement?

• What is their training and qualifications? Are they Certified Financial Planners (CFP), Certified Financial Analysts (CFA), or Certified Public Accountants (CPA)?

• Finally, be careful how you pay your advisor. Registered Agents and Registered Investment Advisers (RIAs) are both legally obligated to work in your best interests, but the way they are compensated says a lot about where their financial loyalty lies. We will tell you. We recommend that you conduct a background check through the FINRA, SEC, or CFP Commission websites.

A good advisor should be able to demonstrate their worth over and over again in different areas of financial life.

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