With all the ups and downs of the stock market, changing interest rates, Social Security claiming strategies and other complex financial issues, many people seek out help. But not all financial advisors are created equal.
A good one will provide holistic planning and guidance that reflects your goals, needs and tolerance for investing risk. To find them, start by identifying their credentials. Get professional help from Best Financial Advisors In Oregon today.
While it’s possible to manage your own investments, many people prefer to have a financial advisor guide them through the process. A financial advisor’s responsibilities can include picking investment funds, creating a portfolio plan and coordinating with other financial professionals, such as tax specialists and estate planners. They can also assist with a variety of financial planning topics, including insurance coverage and retirement planning.
When choosing a financial advisor, it’s important to consider their background and how they get paid. Some financial advisors work on commission and receive a portion of the profits that result from their product sales. They are usually held to a suitability standard, meaning that the investments they recommend are appropriate for their clients’ goals and risk tolerance.
However, this type of financial advisor isn’t always acting in their client’s best interests, as they are incentivized to steer clients towards products and services that will generate the highest commission for them. You can check any financial advisor’s background by using FINRA BrokerCheck, which provides information about their employment history, licenses and certifications. You can also look for an advisor who is a fiduciary, as they have a legal obligation to act in their clients’ best interests.
A good financial advisor should be able to explain complex topics in an understandable way, and they should also be knowledgeable about the latest changes in the tax code and investment regulations. They can also help you determine your financial priorities and develop a strategy for reaching them. They can also help you navigate a major life event, such as the death of a spouse, divorce or new baby.
Many high-net-worth investors choose to work with a financial professional, and according to Morgan Stanley’s latest survey, the most popular reasons include guidance on asset allocation (87%), market analysis (78%), sticking with a financial plan (73%), planning for long-term care risks (68%), and estate planning (67%).
A financial advisor can make a difference in your financial future by helping you establish and reach your goals. They can also provide emotional support when markets become choppy and offer perspective that you may not be able to find on your own. If you’re looking for an advisor, consider the reputation of their firm, testimonials from existing clients and your gut reaction to them.
Taxes
Taxes are among the most complex, confusing financial issues for many people. From counting deductions to filing returns, the process can be overwhelming for anyone without expertise in the field. A financial advisor can help clients with their taxes by preparing returns and recommending tax-minimization strategies. They can also assist with estate planning and crafting investment strategies. They can also help clients resolve tax problems and mitigate the impact of a large tax bill on their balance sheets.
Some financial advisors specialize in tax matters, focusing on how the amount of money someone pays in taxes influences their ability to meet financial goals. Others may specialize in investment management, and still others will focus on the complexities of retirement planning. While it is true that some people only need a simple tax return filed, most people require the services of a professional to understand how their financial situation and investments affect the amount they pay in taxes.
Although there is no blanket rule that prevents financial advisors from giving tax advice, the IRS does state that only designated tax professionals like CPAs and EAs can recommend certain strategies (e.g., those that shelter income from taxation altogether). However, the vast majority of tax-planning strategies favored by financial advisors are designed not to avoid taxes entirely but to ensure that income is taxed more efficiently, either by optimizing the timing of income or the nature of its characterization.
In addition, some financial advisors are certified as tax specialists, which demonstrates their knowledge of complex tax laws and regulations. They can work with their clients to minimize the amount of money they pay in taxes by implementing strategies such as investing in municipal bonds, deferring retirement account distributions, and timing expenses (e.g., property taxes and charitable donations) to stay within lower tax brackets.
A good financial advisor will also keep up to date on the latest tax changes and regulations, allowing them to advise their clients on new strategies. They can also help their clients navigate the sometimes complex rules and regulations that govern investments. They will make sure that the client is aware of the potential effects of these new rules on their investment portfolio. They will also review the client’s current investment strategy and determine if it can be improved to reduce the amount of taxes they owe.
Insurance
A financial advisor can help clients manage their finances and achieve short- and long-term goals while mitigating risk, often through insurance products. Depending on their expertise, they may also advise on retirement planning, education funding, debt management and other financial matters. In addition to advising on investment strategies, many financial advisors have the additional license to sell insurance products. This gives them the opportunity to earn a larger commission, increasing their overall revenue.
Whether you’re a financial advisor or an insurance agent, it’s important to know what you’re doing. Many people confuse the terms “financial planner” and “insurance agent.” In reality, these professionals are quite different, though they can overlap. An RIA or IAR can act as both a planner and an agent, but a financial planner must be licensed to do so and follow a fiduciary standard.
If you’re looking to grow your insurance business by offering financial advising services, you should first understand your client base. This will help you identify and communicate a unique value proposition, which is crucial for growing your business. This process can be time-consuming, but it will help you attract and retain more clients.
To get started, research the financial planning services that are available in your area. Then, find out what insurance products are offered by your competitors and how they differ from your own. You can also talk to your clients to understand their needs and wants. Then, you can tailor your services to meet their expectations.
When starting a financial planning practice, it’s best to work with an experienced broker/dealer. They will be able to provide the training and support you need to get started. In addition, they can help you create a business plan and provide ongoing mentoring to ensure success.
As you start to grow your business, it’s essential to invest in a robust set of risk management tools. This includes professional liability insurance, which protects you from claims arising out of your work as an advisor or planner. It also covers the costs of legal defense, settlements and judgments. Other policies that you’ll need to consider include commercial general liability insurance, employment practices liability insurance and workers’ compensation.
Estate planning
The estate planning process includes creating a legal document that lists all of your assets, including physical items and sentimental items. It also outlines how you want to divide these assets among family members and friends. The estate planning process can be complex and confusing, but a financial advisor can help you create an estate plan that meets your specific needs. They can also make sure that you’ve included all the necessary documents, like a living will, which designates someone to handle your health care decisions in case of incapacitation or death, and a power of attorney, which allows a surrogate to make financial and legal decisions on your behalf.
A good financial planner will take the time to listen to their client’s goals and values and then use their expertise to guide them through the process. They will also review the client’s current investment portfolio and address any issues or changes that need to be made. In addition, they can help clients set up a trust to protect their assets from unnecessary taxes or potential conflicts of interest.
Without a proper estate plan in place, the state will decide how to distribute your assets, which could cause problems for your loved ones. This is known as dying intestate, and it can be costly for your beneficiaries. An experienced financial advisor can help you create a strategy that will provide security for your family and your heirs, while avoiding expensive court proceedings.
In addition to preserving and managing your wealth, an estate plan will also help you define your legacy goals. These can include funding a child or grandchild’s education, donating to a favorite charity, or supporting a particular community project. An advisor will work with you to find creative ways to pass on your wealth while minimizing estate taxes.