The Cost of Not Working with a Wealth Management Advisor

When it comes to managing your finances, it can be tempting to go it alone. After all, there are plenty of resources available online, and you may feel confident in your ability to make sound financial decisions. However, what many people fail to realize is the potential cost of not working with a wealth management advisor.

What is a Wealth Management Advisor?

Perhaps the key to understanding whether you need a wealth management advisor is understanding what a wealth management advisor does and how they may be able to help you. 

A wealth management advisor is a financial professional who helps clients manage their wealth, investments, and assets to help achieve their financial goals. They work with individuals, families, and businesses to provide personalized investment and financial planning advice.

Wealth management advisors typically offer a wide range of services, including, as Forbes explains:

• Investment management
• Financial planning
• Tax planning
• Retirement planning 
• Estate planning

They work closely with clients to understand their financial objectives and create customized strategies that align with their goals.

The Benefits of Working with a Wealth Management Advisor

There are many upsides to working with an experienced financial advisor. 

Professional experience and knowledge

Financial planning can be complex and feel overwhelming. Working with someone who has years of experience and knowledge that can help you put the pieces together can make a world of difference. It’s important to understand how each piece of your financial plan works together. 

If you go it alone, you may miss key opportunities, as it’s impossible to know what you don’t know. The experience of a wealth management advisor is more than having a little knowledge in any area, it’s putting that knowledge together into an actionable plan. 

Continual monitoring and adjusting as laws change

Tax and retirement laws change frequently, and it can be hard to stay on top of those changes yourself. A wealth management advisor makes it their business to know about these changes and to help guide you through them.

Tax planning

How comfortable are you with planning and strategizing your taxes? More than just preparing your annual statement, a wealth advisor can help you maximize your benefits and manage losses. With a variety of opportunities like tax-loss harvesting, your financial advisor may be able to help you craft a strategy that’s right for you. 

Personalized financial planning

Speaking of “right for you,” one of the key benefits of working with a professional is that they can help customize a financial plan that’s personalized to your own financial goals and situation. 

Retirement income planning and Social Security maximization

Did you know that there are over 80 different ways to file for Social Security? And, did you know that making the wrong choices could potentially cost you money? CNBC explains: “When it comes to Social Security, even small mistakes in planning or claiming the benefit can cost you money. The application process is relatively straightforward, yet there are nuances that you may not be thinking about.”

An experienced wealth management advisor can help you understand your options, and the ramifications of each choice you make. 

Helping you avoid pitfalls you weren’t even aware of

With your personalized plan, and continuous tracking of law changes and market forces, your advisor can potentially help you to avoid pitfalls that you never saw coming. You can put a solution in place in advance to manage the unexpected, from inflation to the loss of a spouse. 

Potential long-term financial consequences that come with not working with a wealth advisor

As you can see, there are many benefits to working with an experienced wealth manager. There are also long-term consequences that may come from avoiding their retirement and investment advice.

Missed investment opportunities

Staying on top of all of the potential investment opportunities and financial products in the market is a full time job. That’s why you need a financial planner who is an experienced investment manager. 

As we’ve explained before in our blog, “Investment management is a service where the advisor would do all of the investment research, buy and sell investments on behalf of the client, or in conjunction with the client’s approval, and make those reallocation decisions over time, depending on market conditions and your personal financial situation.”

Inefficient tax planning

As we explained above, tax planning can make a huge difference in your financial life. Without a professional to help you to know the opportunities available to you, it may cost you money.

Lack of diversification

If your investment portfolio is overly concentrated in a few stocks or a particular area of the market, you may be taking unnecessary risk. A wealth advisor can help make sure that your portfolio is properly diversified.¹

Excessive withdrawals from your portfolio and not having enough money to last through retirement

Everyone wants to ensure that they have the money they need to enjoy their retirement. Without a financial planner to help you plan, it may be challenging to know how much you can withdrawal from your portfolio without putting your retirement at risk.avoid the temptation to withdraw funds from your retirement accounts. It may also be difficult to avoid the temptation of withdrawing too much without the accountability of a trusted advisor. A financial advisor can be a key player in your financial future.

How do I find a wealth management advisor I can trust? 

We recommend that you seek out a fiduciary financial advisor. A fiduciary is a person who is required to always act in their client’s best interests.

Elsewhere in our blog we explain, “It is important to remember that not every financial advisor is also a fiduciary advisor. Unless an investment advisor is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator as a registered investment advisor, or are a CERTIFIED FINANCIAL PLANNER^TM professional (CFP®), they are not held to the fiduciary standard.

Start planning for your financial future with Dechtman Wealth Management. Contact us today to schedule a complimentary assessment.

1. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. ↩︎