How an Advisor Can Help You Achieve Financial Wellness
Financial wellness matters almost as much as physical health, and there's a strong correlation between the two. A recent PricewaterhouseCoopers (PwC) study found that 54% of adult workers said they were stressed about money, and 42% expected to draw from their retirement savings to cover pre-retirement expenses.
With numbers like those, it's no surprise that CNBC reported that money has continued to cause anxiety for people across the country — often not even allowing them to save for retirement properly. Prolonged periods of anxiety can negatively impact a person's physical health causing insomnia, fatigue, headaches, and event conditions such as gastrointestinal problems, respiratory disorders, and heart disease, according to Harvard Medical School.
The good news is that there's an antidote to money stresses. If you've felt concerned or anxious over your finances, setting up an appointment with a financial advisor can help you to understand your current situation and help you strategize to meet your goals.
Demystifying a Financial Advisor Meeting
Financial advisors help you maximize your savings and investments while preparing you for retirement. If you're new to investing, or if you've waded in but still don't fully understand how to build your portfolio, a financial advisor can teach you everything you need to know.
Aside from retirement, you may have other long-term goals you'd like to meet. Financial wellness can include a number of facets such as paying off debt, developing a strong emergency savings fund, using credit more strategically, and developing a robust savings and investments portfolio to make your money work for you. But you might have other goals to plan for as well — saving for your children's college funds or for the vacation home you'd like to purchase in the next ten years. The clearer your vision, the more likely you are to get where you'd like to be financially.
An advisor can also help you with important strategic decisions such as how to use credit to build your financial profile. Although accumulating credit card debt can hinder your goals, using credit cards and lines of credit strategically and paying them off each month can help you establish a record of good credit management and financial capabilities.
Another important facet of financial wellness is insurance reviews. It's a good idea to sit with a financial advisor and walk through the terms of your various policies. For instance, it's important to know the costs you're responsible for under your health insurance plan so that you can budget accordingly based on your deductible and out-of-pocket maximums. An advisor will help you fully understand your different policies and how they impact your financial wellness goals.
Preparing to Meet with Your Advisor
Once you've booked a financial planning appointment, you'll want to arrive at your first meeting fully prepared. Take stock of your finances, and bring any documentation that you think might be helpful to your advisor. Don't be shy about student debt, auto loans, and other outstanding debts. Your financial advisor will be able to help you better if they understand your complete financial scenario. Accounts to discuss with your advisor may include everything from your mortgage and car loans to your 401(k) and taxes.
This account information will be vital if a financial advisor is going to take stock of your current position relative to your long-term goals. They'll advise you on how to improve your circumstances by strategically paying off debt, as well as investment options and opportunities to save on your taxes.
Bring a list of any questions you have for your advisor as well. Some helpful topics to raise include:
- Is the Advisor a Fiduciary? A fiduciary advisor is legally obligated to recommend strategies that are best suited to your financial goals and circumstances.
- What Are the Total Costs Associated with the Advisor's Services? Find out your "all-in" number with an advisor. This includes the total amount of investment and advisory fees you can expect to pay while working with them. If possible, choose to work with a fee-only advisor, as this means they won't be making commissions off the products they recommend. This may help you feel more confident in their advice.
- What Will the Long-Term Relationship Look Like? Before committing to working with an advisor, ask how often they'll meet with you and whether you can contact them at any time regarding your strategies. If you think you'll be most comfortable with someone who is responsive and available at all times, make sure you find out in the beginning what their client services look like.
- What Are the Advisor's Credentials? Learning an advisor's professional designations will help you ensure that you're working with someone who is an expert in the areas that are a priority for you. For example, a chartered financial analyst (CFA) would be a smart choice if investing is important to you, while a certified financial planner (CFP) might make sense for broader spectrum planning. CFPs are required to act as fiduciaries.
Choosing the Right Advisor
Ideally, you'll work with your advisor for years to come. The better they get to know you, the more customized they can make their recommendations.
Consider interviewing a few well-reviewed advisors before deciding on who you'd like to work with. Ask how often they'll be in touch and whether they focus exclusively on one area such as investments, or whether they can offer advice across the financial spectrum. Find out the types of clients any financial advisor typically serves, as that will give you a good idea of whether your needs align with what they're offering. Finally, make sure they haven't received any professional reprimands or sanctions.
Developing a workable plan with the right advisor can transform your outlook on money by prioritizing your financial wellness goals ― and your overall well-being.