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  • Writer's pictureMark Fonville, CFP®

9 Secrets Busy Professionals Use When Choosing a Financial Advisor

Updated: Oct 20, 2023


9 Secrets Busy Professionals Use When Choosing a Financial Advisor

As a busy professional, managing your finances can be a challenge, especially when you're trying to juggle your career, family, and social life.


Choosing the right financial advisor can make all the difference in helping you achieve your financial goals and maintaining a healthy work-life balance.


There are many studies that illustrate the potential benefits of working with a financial advisor.


Here are just a few.


Improved Financial Outcomes


While financial advisors are legally prohibited from making promissory statements about returns, a study conducted by Vanguard in 2022, titled "The Advisor's Alpha,"* found that individuals who partner with a financial advisor can potentially add about 3% in net returns to their clients' investment portfolios.


The study attributed this increase to various factors, including asset allocation, cost-effective implementation, rebalancing, and behavioral coaching. By working with a financial advisor, clients can potentially experience improved financial outcomes and a higher likelihood of achieving their goals.


Covenant Wealth Advisors offers a free, user-friendly tool that streamlines the process of connecting with a financial advisor. By completing a brief questionnaire, you can connect with a fiduciary financial advisor who is legally obligated to prioritize your best interests. The entire process takes only a few minutes, and you can be instantly scheduled with an advisor for a complimentary retirement consultation.


Here are two hypothetical examples to help illustrate the potential benefit's of Vanguard's advisor's alpha study.


Meet John, a 45-year-old professional who wants to invest $500,000 for his retirement. He's considering two options: self-managing his investments or working with a financial advisor who follows the Vanguard Advisor's Alpha approach.


Option 1: Self-Managed Investments


John decides to manage his investments independently. He invests his $500,000 in a diversified portfolio that generates an average annual return of 4% over 20 years. Here's how his investment would grow:


Initial Investment: $500,000

Annual Return: 4%

Investment Period: 20 years


Future Value = $500,000 * (1 + 0.04)^20

Future Value = $1,096,635


By self-managing his investments, John's portfolio would grow to $1,096,635 by the time he retires.


Option 2: Vanguard Advisor's Alpha Approach**


Alternatively, John decides to work with a financial advisor who employs the Vanguard Advisor's Alpha approach. The advisor helps John optimize his portfolio, resulting in a 7% average annual return over 20 years:


Initial Investment: $500,000

Annual Return: 7% (4% base return + 3% Advisor's Alpha)

Investment Period: 20 years


Future Value = $500,000 * (1 + 0.07)^20

Future Value = $1,934,917


By working with a financial advisor who follows the Vanguard Advisor's Alpha approach, John's portfolio could grow to $1,934,917 by the time he retires.*


Enhanced Financial Confidence


A survey conducted by Northwestern Mutual in 2020 revealed that 71% of US adults believe their financial planning needs improvement.


However, the study also found that those who work with a financial advisor are more likely to feel financially secure, have a clear financial plan, and be prepared for economic downturns.


Emotional Guardrails


A competent advisor plays a crucial role in safeguarding you from impulsive or emotionally-driven decisions. If you recognize that you sometimes make hasty choices, having this support system can prove invaluable.


Of course, your advisor cannot prevent you from experiencing emotions, just as a guardrail cannot avert every vehicle from veering off the road. However, when fear tempts you to abandon your plan, the advisor's responsibility is to remind you of the strategy you've devised and the ultimate goal: a rewarding and prosperous retirement.


Here are the nine secrets that busy professionals use when selecting a financial advisor.



1. Define Your Financial Goals and Needs


Before you begin searching for a financial advisor, take the time to identify your financial goals and needs. Whether you're planning for retirement, saving for your child's college education, or looking to grow your wealth, having a clear understanding of your objectives will help you find the right advisor to guide you on your financial journey.


2. Prioritize Fiduciary Duty


Always look for a financial advisor who acts as a fiduciary, which means they are legally obligated to put your interests above their own.


Fiduciary advisors will work to provide you with the best advice, minimizing conflicts of interest and prioritizing your financial well-being.


All financial advisors at Covenant Wealth Advisors serve as a fiduciary and don't sell products. If you want to work with a financial advisor who doesn't push you to purchase investment products, and rather, you want an advisor who is focused on providing objective advice, use this no-cost tool to connect with an advisor at our firm.


3. Research Credentials and Experience


Credentials and experience play a significant role in selecting a financial advisor. Look for advisors with relevant certifications such as CERTIFIED FINANCIAL PLANNER (CFP®) or Certified Public Accountant (CPA).


Also, consider their experience in working with clients in similar situations to yours. For example, the vast majority of our clients have over $1 million in savings and investments, they want to enjoy a comfortable retirement, and they value outside guidance and advice.


4. Seek Referrals and Recommendations


Ask your colleagues, friends, and family for recommendations. Personal referrals can provide valuable insight into the advisor's working style, professionalism, and the quality of their advice.


5. Look for a Niche Expert


Financial advisors often specialize in specific areas.


For example, our team specializes in retirement income planning, investing, and tax planning for Individuals with over $1,000,000 in liquid investments. Our free retirement quiz helps connect you with a financial advisor who can advise you on how to retire.


Other financial advisors may specialize in working with individuals within the tech industry. Still others may specialize in working with optometrists.


The point is that you should consider finding an advisor whose expertise aligns with your financial needs and goals.


6. Understand Their Fee Structure


Fee structures vary among financial advisors. Some charge a flat fee, others a percentage of assets under management, and some work on commissions.


Understand how your potential advisor is compensated to avoid any conflicts of interest and ensure transparency.



7. Assess Their Communication and Availability


As a busy professional, it's essential to have a financial advisor who is easily accessible and responsive to your needs.


Make sure your potential advisor has a reliable communication system in place and is available to answer your questions and provide guidance when needed.


For example, at Covenant Wealth Advisors, we use an easy online calendar that allows you to schedule a meeting at your convenience thus helping avoid the back and forth.


8. Perform Due Diligence


Lastly, always perform due diligence when choosing a financial advisor. Verify their credentials, check for any disciplinary actions, and read online reviews to ensure you're selecting a trusted professional.


9. Schedule an Initial Consultation


Before committing to a financial advisor, schedule an initial consultation to discuss your financial goals, assess their communication style, and gauge whether you feel comfortable working with them.


A financial advisor may look great on paper, but you may find out that you just don't click.


Conclusion


By following these nine secrets, busy professionals can find the right financial advisor to help them achieve their financial goals while maintaining a healthy work-life balance.


Take your time to research, ask for recommendations, and schedule consultations to ensure you find an advisor who understands your needs and can guide you towards financial success.


 

Disclosure:



**Assuming 4% annualized growth of $500k portfolio vs 7% annualized growth of advisor managed portfolio over 20 years. The hypothetical study discussed above assumes a 4% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”. Please carefully review the methodologies employed in the Vanguard Whitepaper. To receive a copy of the whitepaper, please contact info@mycwa.com. The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.


Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss.



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