The world of 30 years ago was far different than it is today. A pilot often worked for the same company all his or her adult life. In those days, one working spouse could easily support a family, paying for college ordinarily didn’t require taking out a second mortgage, and people could look forward to retiring on a defined contribution plan as well as a defined benefit plan and social security and possibly a military pension to back all that up.
Today, your hopes and dreams are no different. Like most people, you probably want to buy a home, put your children through college, and retire with a comfortable income. But the world has become a more complex place, especially when it comes to your finances. The company pensions of the past are all gone, frozen or shifted to the PBGC in the form of an annuity. Your financial future is now dependent on the 401k plan with company contributions plus your own contributions handling the bulk of the load in funding the decades that will comprise your retirement years. You may already be working with financial professionals - an accountant or estate planner, for example - each of whom advises you in a specific area. But if you would like a comprehensive financial plan to help you secure your future, you may benefit from the expertise of a financial advisor.
SERVICES A FINANCIAL ADVISOR MAY PROVIDE
Even if you feel competent enough to 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 his or her broad knowledge of areas such as estate planning and investments. Specifically, a financial advisor may help you:
- Understand the choices and financial impact of company benefits at retirement
- Set financial goals
- Determine the state of your current financial affairs by reviewing your income, assets, and liabilities, evaluating your insurance coverage and your investment portfolio, assessing your tax obligations, and examining your estate plan
- Develop a plan to help meet your financial goals which addresses your current financial weaknesses and builds on your financial strengths
- 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
SOME MISCONCEPTIONS ABOUT FINANCIAL ADVISORS
Maybe you have reservations about consulting a financial advisor because you’re uncertain about what to expect. Here are some common misconceptions about financial advisors, and the truth behind them:
Most people don’t need financial advisors - While it’s true that you may have the knowledge and ability to manage your own finances, the financial world grows more intricate every day. A qualified financial advisor has the expertise to help you navigate a steady path towards your financial goals.
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 one area such as investment planning, while others may sell a specific range of products, such as insurance. A qualified financial advisor generally looks at your finances as an interrelated whole, and can help you with many of your financial needs.
Financial advisors serve only the wealthy - Some advisors do only take on clients with a minimum amount of assets to invest. Many, however, only require that their clients have at least some discretionary income.
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. But financial advisors frequently help clients with specific matters such as rolling over a retirement account or developing a realistic budget.
Financial planners aren’t worth the expense - Like other professionals, financial advisors receive compensation for their services, and it’s important for you to understand how they’re paid. But a good financial advisor may help you save and earn more than you’ll pay in fees.
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:
- Reaching or closing in on retirement
- Receiving a raise or promotion at work
- Getting married or divorced
- Paying for your child’s college education
- Buying or selling a family business
- Changing jobs
- Planning for your retirement
- Developing an estate plan
- Coping with the death of your spouse
- Receiving an inheritance or a financial windfall
- Having a baby or adopting a child
In these situations, a financial professional can help you make objective, rather than emotional, decisions. However, you don’t have to wait until an event occurs before you consult a financial advisor. A financial advisor can help you develop an overall strategy for approaching your financial goals that not only anticipates what you’ll need to do to reach them, but that remains flexible enough to accommodate your evolving financial needs. No matter where you are in your career, it is never too early or too late to make a plan for your financial future.
At Retirement Advisors, we have spent the last 30 years helping airline pilots plan wisely for their financial future and retire confidently. If you have additional questions about financial planning or would like to discuss how we can help, request a complimentary 20-minute Q&A session with an advisor at Retirement Advisors of America.
Disclaimer: This blog is intended for informational purposes only and should not be construed as individual investment advice. Actual recommendations are provided by Retirement Advisors of America following consultation and are custom-tailored to each investor’s unique needs and circumstances. The information contained herein is from sources believed to be accurate and reliable. However, Retirement Advisors of America accepts no legal responsibility for any errors or omissions. Investments in stocks, bonds, and mutual funds may increase or decrease in value. Past performance is no guarantee of future results. Any of the charts and graphs included in this blog are not recommendations for the purchase and sale of any security.