From Financial Planning Industry Thought Leader, Michael Kitces
When it comes to designing and formulating a financial plan for the future, you may decide it’s best to hire a financial professional to help guide you on your financial journey. A financial professional can provide an objective and experienced second set of eyes, helping you avoid common pitfalls and accelerate your progress towards financial freedom.
Ultimately, this can lead to reduced financial stress or anxiety and the ability to choose how you spend your time, one of the highest dividends money can pay. But, with roughly 200,000 financial advisors in the US alone, how do you decide who to work with?
Michael Kitces, American financial planner, industry thought leader, commentator, educator, and entrepreneur founder, offers a simple breakdown of the 6 core values of a (good) financial advisor.
Let’s explore them in detail:
Organization
I’ve once heard the role of a financial advisor described as “organizing the paperwork of your life.” While I think that a good financial advisor will help you do much more than that, I agree that part of what a good financial advisor can offer you is bringing order to your financial life.
In practice, this looks like helping you roll over old 401(k)s, consolidating and simplifying them under one account, and helping you summarize your financial situation, complete with a net worth statement and a list of all existing insurance coverages.
Unfortunately for many, their financial life is in disarray, and organization and order may feel like a pipe dream. This can lead to financial stress and anxiety, as they are unsure where they stand in their ability to reach their financial goals. This is where a good financial advisor can be beneficial as they work with you, step by step, to organize and order your financial life, allowing you the peace of mind and clarity that come with it.
Accountability
“Accountability is the glue that ties commitment to the results.”
—Bob Proctor
Next, a good financial advisor will help you follow through on your commitments. This is one of the most tangible benefits a financial advisor can offer, as accountability can lead to the results you desire in your financial life.
In practice, this looks like your financial advisor following up on your decision to roll over that old 401(k) and helping you stick with it till it’s done. In addition, it can look like your financial advisor connecting you to an estate planning attorney to finally draft the estate planning documents you’ve wanted to get done, or your financial advisor simply calling you to follow up on the umbrella insurance coverage you were going to add.
Whatever it is, a good financial advisor will walk with you each step of the way to help you follow through on your commitments and achieve the financial results you are aiming for.
Objectivity
Kitces writes that a good financial advisor “brings insights from the outside to help you avoid emotionally driven decisions in important money matters.”
A good financial advisor offers you an objective second set of eyes, combined with their financial planning knowledge and expertise, to help you avoid poor financial decisions and guide you towards optimal financial outcomes.
In addition, a good financial advisor maintains objectivity when it comes to financial planning recommendations. That means they aren’t making recommendations based on third-party commissions or kickbacks that they might receive but simply based on what’s in the best interest of their clients. That’s why it can be essential to work with a CFP® professional, as they are held to a fiduciary standard by the CFP® governing body and required to act in the best interest of their clients at all times and disclose any conflicts of interest to their clients.
Proactivity
Next, a good financial advisor will help you anticipate and financially prepare for your life transitions. Through their recommendations, your financial planner will help you design a financial plan that creates a buffer in your life, allowing you to weather the hard times while preserving your ability to reach your financial goals.
In practice, this can look like helping you set aside a rainy day fund and making sure you have the appropriate insurance coverages in place for life, disability, umbrella, and even home and auto coverage amounts.
A good financial advisor will constantly be scanning the financial horizon for upcoming life transitions or threats to your plan and coming to you with recommendations and adjustments you can make to navigate them better.
Education
Dave Ramsey says that when you’re hiring a financial professional, whether it be an advisor, realtor, or insurance agent, you want to find someone with the heart of a teacher. It’s great advice since part of what a financial professional can offer you is the insight and education to help you improve your financial decision-making going forward.
A good financial advisor will help you understand exactly what you need to know to be financially successful, educating and teaching you each step of the way. This means that when your financial professional recommends a strategy, they will also take the time to explain how it works and why, ultimately helping you gain a higher level of confidence and understanding in your plan.
Partnership
Lastly, a good financial advisor doesn’t just work for you, they work with you. They understand that achieving your financial goals is a team effort, and they are willing to walk with you each step of the journey.
In addition, when making financial decisions, a good financial advisor will involve you in the process, helping you feel a sense of buy-in and control over your financial decision-making. This can ultimately lead to a greater sense of commitment and the ability to complete your financial to-do’s and reach your financial goals.
Idaho Medical Association Financial Services Is Here to Help
If you’ve been interested in working with a fiduciary CFP® professional to help outline your unique financial plan, complete with a custom investment portfolio to deliver your financial goals, then Idaho Medical Association Financial Services is here to help.
Idaho Medical Association Financial Services is among the top financial planning firms in Idaho. At Idaho Medical Association Financial Services, our primary focus is on assisting our clients with their financial plans, like tax planning and building long-term wealth. We pair our clients with a dedicated CFP® professional backed by a resourceful and dedicated team.
For Idaho Medical Association Financial Services, it’s about so much more than money. It’s about serving families across Idaho and helping them achieve financial freedom. To learn more or schedule a no-cost consultation, visit our website or call (208)-504-1736.
