When Should I Hire (or Change) a Financial Advisor

Fort Pitt Capital Group in Webinar 11 March, 2021

Let’s be honest – not everyone is ready to hire a financial advisor. When does working with an advisor begin to make sense, AND which type of advisor should you consider during different life stages? Certified Financial Planner Practitioner, Brad Newman, will address the stages of life and situations that may arise that warrant hiring or “upgrading” an advisor and why.

 

 

The presentation outline is below:

  • Let me say that hiring a financial advisor isn’t the right approach for everyone & there are different types of advisors based on your needs & stage of life. Before we get into the details, let’s look at some life stages & the types of services & advisors that may be appropriate for each:
    • Just starting out: focus on saving in your 401(k) & maximizing your company’s match…no advisor is needed.
    • Investments of $10-$50k: start to think about diversifying into a Roth & building your regular savings…look for a low-cost/low-touch option like Vanguard.
    • Investments over $250K and still years of growth ahead of your:  start to think about developing a coordinated/integrated plan…this is the time to start thinking about an advisor that provides customized planning & investment management on a fee-only/fiduciary basis.
  • Most clients come to us at an inflection point in their lives that make them ‘get serious about managing their money’ – some clients have never worked with an advisor before & other clients realize that they need a different advisor for the next phase of their lives – the most common events that cause someone to contact us are:
    • Nearing retirement:  This is the most common reason clients come to us…most are w/in a 10-year window of retirement & wake up one-day w/ the epiphany that retirement is no longer a far-off academic exercise, but an impending reality…they also realize that their timeframe for recovery is much shorter than it used to be any mistakes will be more difficult to recover from – their immediate goal is to quantify how well prepared they are to re-create their paycheck after they stop working & to make sure that the risk level of their portfolio is appropriate for the next phase of life (spoiler alert, it typically isn’t.)
    • Realizing that their portfolio has reached a ‘critical mass’:  This is the 2nd most common reason clients come to us…clients realize that as their portfolio has grown, so has the dollar impact of any mistakes they make…while they felt comfortable making decisions on a portfolio a few hundred thousand dollars, the size of the portfolio now requires professional management.
    • Selling a business:  In most cases, this a combination of the first two reasons, but on steroids…almost overnight, their timeframe has been cut to zero & their portfolio has grown exponentially – the real goal is to create an income stream that will replicate what their business has provided.
    • Inheritance:  Clients who have recently received an inheritance are suddenly dealing with a significant increase in portfolio size that often don’t feel equipped to handle appropriately & there is an added feeling of responsibility to be a ‘good steward’ of the assets they’ve inherited. There is also a need to realign the portfolio with their needs, often much different from the deceased’s needs.
    • Recently widowed: Typically, we are working with the surviving wife & they’ve not historically taken an active role in the family’s finances or investing – we begin the process by establishing a baseline understanding of income requirements & comfort level w/ risk…from there we can begin to discuss appropriate investment strategies.
    • Overwhelmed by recent market volatility:  Notable market downturns like last March, the financial crisis, or the tech bubble bring a significant number of clients to FPCG – most people feel that it’s easy to invest when the market is going up but don’t know how to manage a portfolio when the market drops significantly.
  • If you have reached the point, for whatever reason, that you feel professional & fee-only investment management would be of interest to you…please let us know & we’d be happy to find a time for an introductory conversation.
  • Our process is very straight forward:
    • Get to know you & learn about your situation.
    • Jointly determine if we would be a good fit to work with you.
      • Can we add value to your situation?
      • Do we think we’d enjoy working together for decades to come?
    • Create a custom financial plan for you to quantify 1) your retirement funding level & 2) how much risk you need to take to accomplish your goals.
    • Develop an investment strategy that meets your needs
    • Help you transfer/consolidate assets for the implementation of the mutually agreed-upon investment strategy.
    • Ongoing consultation to make sure that your plan & portfolio continue to adapt to your evolving life & the ever-changing environment
  • I’d be remiss if I didn’t mention our ongoing collaboration with your other advisors…from our initial planning & the development of your strategy.
    • We work very closely with your attorney & accountant to make sure that all bases are covered.

Read more about How to Hire a Financial Advisor.

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