One of the top questions I receive as a financial advisor is, “What exactly do you do and how can you help someone like me?” If you’ve ever wondered the same thing, you’re not alone. The answer I give when I meet new people is this: Financial advisors are committed to helping individuals and families set and reach their financial goals. Advisors provide value beyond investment strategies and financial advice; they are there to help clients feel more financially confident for the expected and unexpected moments of life. Here are some specific ways you can benefit from this professional relationship.
Personalized advice. There’s no “one-size-fits-all” financial plan. Financial advisors can help you evaluate your current circumstances to create a plan of action specific to your goals and concerns. You don’t have to achieve a certain level of wealth or have complex finances to enlist their services. Financial advisors are equipped to serve you, whether you are starting out in your career, in the middle, entering retirement, or already retired.
Financial advisors are committed to helping individuals and families set and reach their financial goals.
Investment strategies, financial product recommendations, and more. A financial advisor will suggest ways to move forward based on your short-, medium-, and long-term financial goals. Investment strategies will vary based on your time horizon—the years ahead of you that you have to reach your goals. Your advisor may recommend a balance of stocks, bonds, and other solutions aligned to your risk tolerance. You may be advised on ways to optimize your tax situation, which can include investing in accounts that offer tax advantages, such as a Roth or traditional IRA, Health Savings Account, or 529 plan (Financial Glossary). You can expect an advisor to review insurance coverage and other solutions to strengthen your financial safety net. Lastly, your financial plan may also include tips for saving and budgeting.
A Roth IRA is a type of tax-advantaged individual retirement account that allows you to contribute after-tax dollars toward your retirement. Known as an individual retirement arrangement by the IRS, the primary benefit of a Roth IRA is that your contributions and the earnings on those contributions can grow tax-free and be withdrawn tax-free after the age 59 and a half years, assuming the account has been open for at least 5 years. Roth IRAs are similar to traditional IRAs, with the biggest distinction being how the 2 are taxed. Roth IRAs are funded with after-tax dollars. Unlike a traditional IRA, the contributions are not tax-deductible, but once you start withdrawing funds, the money you take out is tax-free.
An individual retirement account (IRA) is a long-term, tax-advantaged savings account that individuals with earned income can use to save for the future. The IRA is designed primarily for self-employed people who do not have access to workplace retirement accounts such as the 401(k), which is available only through employers. However, you can also have an IRA even if you already have a retirement plan at work. You can open an IRA through a bank, an investment company, an online brokerage, or a personal broker.
A Health Savings Account (HSA) is a tax-advantaged account created for or by individuals covered under high-deductible health plans to save for qualified medical expenses. Contributions are made into the account by the individual or their employer and are limited to a maximum amount each year. The contributions to an HSA are invested over time and can be used to pay for qualified medical expenses, such as medical, dental, and vision care and prescription drugs.
Named for a section of the Internal Revenue Code, 529 plans are tax-deferred savings plans designed to help pay for college expenses. In some states, qualified withdrawals for these costs are not subject to federal or state taxes.
Source: Investopedia. Financial terms dictionary. Accessed November 4, 2024. www.investopedia.com/financial-term-dictionary-4769738
Confidence in your financial decision-making. A financial advisor can be a sounding board as you move through life and experience events that impact your bottom line. You can ask your advisor for input on how a job change, large expenditure, or other financial commitment will affect your financial outlook. You can feel more secure about your charitable giving when it’s been incorporated into your overall plan. Together you can adjust your investment strategies to accommodate life circumstances. As a result, you will be able to make financial decisions knowing you have considered the larger picture.
Multigenerational support. A trusted financial advisor can be a resource for your entire family. Your goals may include caring for aging parents or putting kids through college. Your advisor can also educate you on a wealth of topics that impact your family’s financial well-being. These may include estate planning, wealth transfer, wills, healthcare directives, powers of attorney, trusts, and beneficiary assignments. It’s never too early to introduce your adult children to your advisor and encourage them to make use of financial planning services. Financial advisors understand the values that drive you and can help instill these as your family forms their relationship to money.
Collaboration. In addition to providing consultation to you, your advisor can work directly with a tax preparer and estate attorney as needed. By keeping your advisor in the loop on tax and estate matters, you can be assured of comprehensive professional support.
Ongoing advice for your changing circumstances. Life happens. Goals change. Markets fluctuate. In a constantly changing world, a lasting relationship with a financial advisor allows you to work in tandem with a partner you trust to navigate all that life will throw your way.
About the Author
Dianne Lynch, CFP, ChFC, APMA, AWMA, CRPS, CRPC, is a financial advisor and vice president with Ameriprise Financial Services, LLC, in San Jose, CA. She specializes in fee-based financial planning and asset management strategies and has been in practice for 43 years. Ms Lynch can be reached at www.ameripriseadvisors.com/dianne.lynch/, 408-963-2303, and 225 W. Santa Clara St. Ste. 1600, San Jose, CA 95113.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Stock investments involve risk, including loss of principal. High-quality stocks may be appropriate for some investment strategies. Ensure that your investment objectives, time horizon, and risk tolerance are aligned with investing in stocks, as they can lose value.
There are risks associated with fixed-income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities.
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