WHEN TO WORK WITH A FINANCIAL ADVISOR
Financial plans and investment options and estate planning—oh my! Erin Pentz, AMWA®, breaks down what a financial advisor does and when you should consider working with one.
If you’re like me, maybe you’ve found yourself in a different financial situation recently. In January, I left my steady-paying remote marketing job in hopes of finding a local opportunity—or so I thought. I didn’t have another job lined up and with COVID-19 impacting business and the economy, my original plan to land a new job came to a screeching halt.
Without a paycheck and company benefits, it’d be easy to dismiss the idea of working with a financial advisor. But let me suggest that it might be a great time to start working with a financial professional! With the extra time, I’ve uncovered all of the random subscriptions I signed up for over the years and just never really paid much attention to (I’m looking at you Experian, Apple Cloud Storage and Birchbox!). But cutting back on random subscriptions is only a small part of my financial wellness.
It can be pretty overwhelming to think about all of the ways money impacts our livelihood. Lucky for us, we don’t have to go it alone! Financial advisors like Erin Pentz, AWMA®, CCO and Director at SBC Wealth Management can help us understand our total financial health. That means she helps with things like:
Income & distribution strategies
All of these things work together to ensure your financial success—whatever that means to you.
“We don’t expect you to build the watch, but we expect you to know how to tell time.” —Erin Pentz
Maybe this sounds great in theory, but you’re still not convinced. That’s fair. I’m not an expert, but I did sit down with one to get a better understanding of what a financial advisor does and when to start working with one. Erin Pentz explains.
At what age should someone consider working with a financial advisor?
It’s less about your exact age and more about what we call “life events.” A life event is anything that affects your financial situation—getting married, buying a house, changing careers, having a baby, etc. Any of those situations (and many more) qualify as a life event that can impact your finances. It’s a good idea to review your financial plan and make adjustments as you experience life events to keep you on your path to financial success.
You mention changing careers. It’s a running joke that I have changed jobs about a hundred times. I also waited to get married until I was a little bit older. Based on your advice, I should have been working with a financial advisor years ago—even when it was just me?
If you have enough income to contribute to benefits at work, you should consider working with a financial professional.
Working with a financial professional can mean working with a financial advisor who sits down with you at least once a year to review your plan and takes time to educate you on the different elements of a financial plan. In this way, you’ll often pay an annual fee for retaining their services (it could be an actual fee or baked into your portfolio management costs).
An annual fee can feel overwhelming if you’re just starting out, so another option is to pay a one-time fee to have a financial advisor draw up a financial plan. There are many elements to a financial plan, so make sure you understand everything that’s included before you agree to pay for one. You may not need all of the elements that are often included (which may help save costs since you may be charged an hourly rate).
I offer both options for clients and while there are differences in both engagements, both require the client to notify me of life events so we can keep their plan current with their changing financial situation.
I think I understand, but can you explain exactly what I get when I work with a financial advisor? Can’t I get the information I need online, through a podcast, or in self-help books?
Of course. I can help you with all of the broad areas you listed above, but also the niche areas under each of those buckets. For example, helping you think through life and/or disability insurance as a subset of protection planning. Those general buckets are just the tip of the iceberg when it comes to building your financial plan.
I work with you to understand where your finances are at today, where you want to be, what your goals are in life and the best way to help you get there. I help you consider all of the areas of your finances that you might not have even considered and prioritize them based on your specific and unique needs.
It’s tempting to consider following self-help advice from books, blogs, podcasts and more. And there really is some good foundational information out there. But remember that this advice doesn’t take into account your unique situation.
Let me explain.
If I am laying out a plan for you, I understand how your spouse’s income may affect the decisions we make. As we design financial solutions for you, I make sure we aren’t unintentionally impacting another financial area, say your tax bracket. If we do create a plan that impacts your tax bracket, we know that going into it, so we can make adjustments in other areas, such as retirement planning perhaps, to offset the impact.
How do you make sure I stay on the right financial path?
Not only do your goals impact your financial plan, but so do things like federal rules and regulations and market and economic conditions.
Aside from our in-person meetings, my team and I stay current on all of the federal, state and local rules and regulations that might affect your plan. Given the current regulatory environment, we’ve seen a lot of new rules and regulations go into effect that could impact your financial plan. One simple example of this was the extension of the tax deadline, but there have been other lesser-known or as easily interpreted changes that could also impact our client’s plans.
It’s no secret that we’ve experienced a lot of market and economic volatility with the current pandemic. Our analysts are experts at seeing through current market trends and selecting investments that are set up for long-term success. However, we have to be aware of how current market and economic conditions affect our investments and what it could mean for our clients who are nearing retirement.
As a financial advisor, my primary goal is to help educate you on the impact each of your individual financial decisions has on other areas of your life. We have a saying here at SBC that “We don’t expect you to build the watch, but we expect you to know how to tell time.” I think that’s a really good analogy for what we do. You need to understand how each decision you make impacts your overall financial health because you can’t separate your life from your money or your money from your life.
Erin Pentz, AWMA®, is Chief Compliance Officer, Principal and Wealth Advisor at SBC Wealth Management. Erin has been recognized as a 2019 Forbes Best In State Next-Generation Wealth Advisor, and a 2017 and 2018 America's Top Next-Generation Wealth Advisors.
For more information about Erin and her firm, visit www.sbcwealth.com.