Why Pay for an Advisor When You Can Find Free Advice Online?
It’s true: You can find plenty of financial advice from a simple Google search. Whether it’s investing, retirement, stock picking or some other topic, it’s sure to be covered. But what you don’t know from an online search is if it’s the right advice for you! Your financial future is far too important to leave to guessing, or general rules of thumb.
While technology has provided us some wonderful conveniences, some of which can be helpful financially, such as online banking and automatic contributions, it’s also provided a false sense of over-confidence. There may be information available at your fingertips, but are you really equipped to do it yourself?
Financial planning is not like a home-improvement project, where you watch a video and, if you feel confident in your repair skills, follow the step-by-step instructions. If you make a mistake, you can always call for reinforcements later on. Financial planning is not a one-size-fits-all solution. We all have different goals, different family makeups, different life experiences, different income levels – the list goes on. A small mistake can have long-lasting effects. For example, what may feel like a “simple” decision about when to take Social Security benefits can be a permanent decision you can’t change.
At Montgomery Taylor Wealth Management, our Sonoma County wealth advisors have years of experience helping clients with their financial planning needs, from taxes (and changes to the tax laws) to retirement contributions and withdrawals. Unfortunately, we sometimes hear from new clients after they’ve “messed up” and now need help fixing the problem. This can be a lot more difficult than setting someone up correctly the first time around.
Fiduciary financial advisors can offer strategies you may not have thought about on your own and provide insight you may not be aware of. Studies show that on average, folks who work with financial advisors have much larger amounts saved than folks who don’t.
It may be a valid question when first getting started: “Why pay for a financial advisor when you can find free advice online?” But the Sonoma County wealth advisors at Montgomery Taylor Wealth Management know better. Here’s our answer.
Financial planning is far too important to put off. Contact Montgomery Taylor Wealth Management and get the conversation started.
Customized Plans That Focus on Your Personal Goals
Many people assume that financial advisors focus only on finances, such as savings and retirement nest eggs. While these two elements are crucial parts of a financial plan, financial advisors actually start by discussing your personal goals.
Take retirement for example. Only after you establish some goals for retirement can you and a financial advisor determine the amount of savings you will need and a plan to get there.
You may want to travel to visit grandchildren or stay at home and garden. You may want to start a business or continue working part-time. All of these goals have a different financial profile.
Once you and your financial advisor discuss your goals, you can then customize a plan designed to reach those goals.
This is across the board, for all of life’s goals. Do you want to save for the down payment on a home, for example, or contribute to tax-advantaged higher-education funds for your children or grandchildren? All elements of your life matter.
A customized financial plan and the steps to get there can help relieve one of the most pressing concerns DIY investors have: Am I making the right moves to reach my goals? Working with a fiduciary financial advisor can help you feel more confident about your financial life.
Educated Support with Investments and Savings
While much advice about investment and savings does exist online, it can be very difficult to completely make sense of it if you don’t have a background in personal finance or economics. Plus, if you don’t have that background, you may not know what you don’t know – especially if whatever online advice you’re accessing never mentions it.
Fiduciary financial advisors not only have a legal obligation to put their clients’ best interests first, but they have the education and knowledge to help you make wise decisions about your investments and savings. A financial advisor can help you allocate your assets, for example, in a way designed to maximize appreciation over time and minimize risk. An advisor can help you choose stocks and other investments based on research and the economic outlook for certain sectors.
A financial advisor’s experience can be invaluable to investors and prevent them from making costly mistakes.
An Outside Perspective
In our experience, one of the most difficult things for DIY investors to do is manage their emotions about their finances. Let’s face it, from debt loads to plunging stock markets, finances are full of potential scenarios that can call forth strong emotions – panic, anxiety, shame; even irrational exuberance and joy.
Investors heavily invested in the stock market, for example, can panic sell if the market experienced a significant sharp drop, as it did in March 2020. It can be hard to rein in the urge to sell as you watch your portfolio value drop quickly over just a few days.
The problem, though, is that historically, the broad-based U.S. markets rise over time. The S&P 500, for instance, has risen nearly 10 percent annually over the last 100 years, averaging good years with bad. Investors who panic sell are effectively losing the opportunity to regain their losses.
Down markets can also present buying opportunities for disciplined investors. Good stocks that are battered by downward pressure in markets can be hidden opportunities in value.
Similarly, emotions can also lead investors to happily buy stocks that have been rising over time. But that can also present problems: Investors who buy at or near the top can be buying a stock that could pull back soon after they buy it.
It’s extremely important to keep emotions separate from your financial decisions, which can be very hard to do. A financial advisor can help. For example, during uncertain times, the Sonoma County wealth advisors at Montgomery Taylor Wealth Management help our clients remember their long-term goals, tune out the noise and stay focused.
Taxes can be another financial killer, if not taken into consideration. Again, in our experience, this is an important area that can be difficult for DIY investors to manage, for several reasons.
First, taxes are complicated. Your investments can be subject to capital gains taxes, which can be unpredictable. If you withdraw investments, you may need to pay income tax on the proceeds for the year. The withdrawals can also change your tax bracket for the year. You may end up paying more than is advisable.
Second, you may be subject to tax penalties if you don’t pay the tax you owe.
Third, tax laws can be used to reduce your overall tax burden as well as maximize your income. Tax-advantaged retirement plans like 401(k)s and IRAs can help investors save on taxes. But there are several other complicated ways that folks can save on taxes, such as utilizing investment losses incurred within a specific year.
Fiduciary financial advisors can help you stay on top of taxation issues.
When looking for a financial advisor to work with, it’s important to find one who fits your needs. If you’re looking for a financial advisor in Sonoma County, contact the team at Montgomery Taylor Wealth Management and get the conversation started.