Fifty years ago the world was a much different place. Gone are the days when an individual worked at the same job all his or her adult life, lived in the same house, and one spouse could support a family. Paying for college ordinarily did not require taking out a second mortgage, and people could look forward to retiring on Social Security and possibly a company pension. Nowadays, you may get the gold watch for a long-tenured career, but the lifetime pension you hoped for is quickly going the way of the dinosaur. Companies and municipalities are abandoning pension arrangements faster than you can say the word, “Insolvent.” Realizing they were promising more than they could pay, pensions have shifted from company provided, to self-provided in the form of 401K and 403B plans. Now, the responsibility for establishing any sort of dignity in retirement has fallen on the shoulders of the individual.

While your hopes and dreams may not have changed, the world certainly has. The means by which you achieve those dreams have morphed into something quite a bit more complicated, especially when it comes to your finances. You may already be working with financial professionals—an accountant, property and casualty agent, life agent, investment representative, or estate planner. Each advises you in a specific area. However, you may want to consider how this fragmented approach may be costing you in terms of time, money, and effectiveness.

To build a home you need a blueprint and someone who understands all aspects of the project and can pull it all together for a desired result on time and on budget. A financial planner works much the same way. There is inherent weakness in any plan that has too many cooks in the kitchen. What is needed is the master chef that helps coordinate the meal, its preparation, methods, and ingredients, orchestrating the final result. In fact, this process of orchestration describes perfectly what a competent financial advisor does. Even if you feel you can develop a plan of your own, a financial advisor can act as a sounding board for your ideas and help you focus on your goals, using broad knowledge and a “whole-istic” perspective. In the absence of this, the right hand doesn’t know what the left hand is doing, and the plan could suffer.

Services a financial advisor may provide

Specifically, a financial advisor may help you with the following:

• Establish reality! An advisor helps you determine what it takes to retire and sets appropriate financial goals.
• Determine the state of current financial affairs by reviewing income, assets, and liabilities, assessing tax obligations, and examining your estate plan.
• Reveal weaknesses in your insurance and investment programs. Are you paying too much for too little? Do you have what you need, and know what you don’t need? An advisor increases efficiency and frees up dollars that can be placed for long-term growth instead of wasted expense. This can amount to a huge difference in the result achieved at retirement. Just as the power of compound interest works to your advantage, the power of compound mistakes can do irreparable harm to your assets and expectations. A planner seeks to enhance the positive and minimize or eliminate mistakes in your own personal economy.
• Make recommendations about specific products and services. Many advisors are qualified to sell a range of financial products.
• Monitor your plan and periodically evaluate its progress.
• Adjust your plan to help meet your changing financial goals and to accommodate changing investment markets or tax laws

Each of the above issues is greatly simplified here. Any one of them, when rectified as applicable, can yield significant benefits, both immediately, and more so over time.

Some misconceptions about financial advisors

If you have reservations about consulting a financial advisor from uncertainty about what to expect, here are some common misconceptions and the truth behind them:

Most people do not need a financial advisor. Actually, most if not all do. While it's true you may have knowledge and ability to manage your own finances, the financial world continually grows more intricate. An experienced financial advisor, who does this for a living every day and has been involved in many unique client cases, has the expertise to fill in knowledge gaps and implement a plan.
All financial advisors are the same. Financial advisors are not covered by uniform state or federal regulations, so there can be a considerable disparity in their qualifications and business practices. Some may specialize in only one area, while others may sell a specific range of products. A qualified financial advisor looks at your finances as an interrelated whole, and can help you orchestrate viable solutions for a strategy that is more appropriate to your specific situation.
Financial advisors serve only the wealthy. Some advisors do only take clients with a minimum amount of assets to invest. Many, however, only require that their clients have at least some discretionary income and a real desire to get ahead.
Financial advisors are only interested in comprehensive plans. Financial advisors generally prefer to offer advice within the context of a client's current situation and overall financial goals, and frequently help clients with specific matters such as rolling over a retirement account or developing a realistic budget.
Financial planners are not worth the expense. Like other professionals, financial advisors receive compensation for their services, and it is important for you to understand how they are paid. A good financial advisor will help you save and earn more than you will pay in fees. At the end of the day, it comes down to the value an advisor brings to the table. If all decisions were only about cost, we would all be driving compact cars. The truth is, implementing your own financial plan, could be far more expensive and costly than finding a competent advisor.

When is it time to consult a financial advisor?

In many cases, a specific life event or a perceived need may prompt you to seek professional financial planning guidance. Such events or needs might include the following:

• Getting married or divorced
• Having a baby or adopting a child
• Paying for your child's college education
• Buying or selling a family business or real estate
• Changing jobs or careers
• Planning for your retirement
• Developing an estate plan
• Coping with the death of your spouse
• Receiving an inheritance or a financial windfall

In these situations, a financial professional can help you make objective, rather than emotional, decisions.

However, you do not have to wait until an event occurs before you consult a financial advisor. An advisor can help you develop an overall strategy for approaching your financial goals that anticipates what you will need to do to reach them and that remains flexible enough to accommodate your ever-evolving life.

In closing, a financial advisor can help you navigate a world that has become too complicated to go it alone, financially speaking. The industry as a whole has delivered answers to the undue risk most people are taking with their money, and many new products have been developed to meet specific challenges. These are solid answers, but not simple ones. These answers must be explained as part of an integrative and interactive process with the people they affect and a competent planner. Competency often goes hand in hand with experience. Today, anyone who goes to school and passes a test can call himself or herself an industry professional, but the old adage is true. There is no substitute for experience.

Call Ray Russo, President of Virtuoso Capital Management for seasoned financial advice and information at (760) 933-8767.