Ask Away Blog: What is a Financial Advisor and Why You Need One from Graylock Advisors

What is a Financial Advisor and Why You Need One from Graylock Advisors

Friday, June 7, 2019


You have probably seen commercials for financial advisors on TV, and maybe even seen local ones on billboards in your hometown.  Most people have heard of a financial advisor before but they have no clue what that even means.  Is it someone that advises you on your money? Is it someone that invests your money for you? If you ask yourself those questions then this is post is most definitely for you.  Today I'm going to tell you what a financial advisor does and why you may need to look into one. 



What is financial advisor like Graylock Advisors?

Simply put, a financial advisor is your partner when it comes to planning for your future and your finances.  If you have a retirement age in mind and a life plan for sending your children to college, you can really benefit from a skilled professional to help you do things like stay out of credit card debt and properly invest your money.   A financial advisor can help you with many topics such as:  
  • how much money you need to save
  • the types of accounts and insurance you need 
  • estate and tax planning
A financial advisor is a great source of knowledge to help educate you about what you need to do in the future and for the future as well as how you can do it.   So yes, in a way, you're getting financial advice.  As you learn more and more and start to get a basic understanding of things, you'll move on to learning even more complex matters from your financial advisor like investing, insurances, and taxes. 

A financial advisor like Graylock Advisors will guide you through the steps to plan your financial future and the path you must take to achieve your long term goals. 



How does a financial advisor like Graylock Advisors work with you? 


Initially, you and your advisor will have to determine where you currently stand.  That's the first step in planning for the future.  You will be asked many questions about your current situation and your future needs.  You must be honest because your advisor needs all of this information.  You will need to disclose your income, liabilities, assets, and expenses.   And of course you must list any future pensions and income sources, retirement needs, and let your advisor know about any long-term financial obligations.   

You may also  be asked about your understanding of some investment topics like risk capacity and tolerance.  If you have any investment preferences, this is your chance to let those be known to your advisor. Remember, this may seem like some hard work up front but it will help you properly  save money in the long run.  

You will also have to dive into your current estate plan if you have one and you should always make your financial advisor aware of anyone you are working with like a lawyer or an accountant.  All of this information is crucial for your financial advisor to understand your current financial position and your future projections. 

How does a financial advisor create a plan? 
Using the information you have provided them, a financial advisor will come up with a plan that works as a roadmap for your financial future.  It will summarize your current situation and list your net work, liabilities, and assets.  It will clearly state the goals you have for your future.   

Next there is an analysis of your risk tolerance, your estate details, your family situation, and any long-term care risk.   Your financial plan is developed so you can see the best and worse case scenarios for retirement and make sure you won't be in a situation where you outlive your money because you did not properly plan. 

What actions get taken when working with a financial advisor?  
While a plan is important, it's completely useless without any action so of course your financial advisor will work with you to determine a chart for the percentage of your total financial portfolio that can be invested across various assets.  Your advisor will make sure this plan fits your tolerance and risk capacity, using the information from your initial questionnaire you filled out. The financial advisors out there know the law and their company's investment policy when buying and selling financial assets so it's always a safe bet to use an expert in this field.  


Is there a cost? 
Obviously this service does not come for free.  So make sure you have a serious discussion with your financial advisor so you understand all of the fees and all of their recommendations for your money.  In the end it's still your money so you should have a decent understanding of how it's being deployed.  If you don't feel comfortable with something, make sure you discuss it with your advisor.  

If a financial advisor recommends a specific investment make sure you ask and understand why they are recommending it.  Always keep yourself in the loop and don't be afraid to ask for help.  


Why else would you need a financial advisor? 
When you work with a financial advisor and you have an investment plan in place you'll get regular statements and updates that explain the current state of your portfolio.  You will have regular meetings with your advisor to review your goals and your progress and to answer any questions you may have.  If you can't meet in person, phone calls and video chats are a great alternative.  

It's also important to keep your financial advisor informed of any changes that occur like a new job, a new home, adding to your family, or getting a divorce.  

Of course in between meetings, it's important to keep your financial health in check.  If you haven't already you surely need to  get a on a budget and figure out a more responsible way to spend money each month.  You should have a system in place to track your spending and even your debt payoff progress.  You are the person responsible this part of your finances so make sure you keep up! 

So if you feel overwhelmed with finances and knowing what to do for your future, a financial advisor can be the right choice for you! 



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