5 Reasons Working With a Financial Advisor Can Pay Off
July 19, 2023
Jeremy Gove

New technology has made it easier for people to invest on their own, but doing so may not always be the best option when saving for important life goals. Enlisting the help of a trusted financial advisor can help minimize slip-ups and ensure that your financial plan stays on track. With this in mind, here are several of the potential benefits you could enjoy from partnering with an advisor:

1. Benefit From Their Expertise 

Even if you watch for the latest financial news and your TV is constantly tuned to financial networks, competing with professionals to access valuable information and the training required to digest and act on it takes work. Not only do financial advisors often have resources at their disposal that retail investors do not, but they also have the time to commit to the markets and plenty of experience to lean on.

Many financial advisors have licenses and certifications that denote expertise in certain financial planning topics, from tax and risk management to investing and retirement planning. These certifications are earned through years of study and hands-on experience navigating the markets and helping clients fulfill various needs. Of course, these topics are complex, but piecing them together into an effective and individualized plan can be even more difficult and time-consuming.

Speaking of the time that goes into financial planning, the forces that drive the economy and the various financial markets constantly change and may necessitate subtle or significant changes to your long-term plan. Whether you’re retired or have a full-time job, staying on top of everything that could impact your finances can be difficult. When working with a financial advisor, you are

partnering with someone who has devoted their career to understanding and monitoring the markets.

2. Take the Emotion Out of Investing 

Watching the effects of stock market volatility in your portfolio can trigger emotional responses – it’s hard to avoid. When the markets are struggling, and your monthly financial statements show losses, it can lead to panic and the urge to sell, even if you’re an experienced and disciplined investor. But conversely, when the markets are flying high, it can be equally challenging to resist the temptation to buy more assets or increase the risk in your portfolio.

Short-term market movements shouldn’t cause you to lose sight of your long-term plan; an advisor can help you maintain that perspective. In addition, you can look to an advisor for encouragement and objectivity when the markets are unpredictable. They can help ensure that your finances are properly positioned to weather volatility and that you stay on track to reach your goals 5, 10, or even 20 years later. Investing doesn’t have to be like riding an emotional rollercoaster – an advisor can shoulder that burden for you.

3. Focus on More Than Just Returns 

Investing is about setting long-term goals and striking the right balance between risk and return based on your needs and time horizon. The process involves more than simply identifying investments that have recently yielded the highest returns – assets should be diversified across different sectors and asset classes to ensure your portfolio isn’t too vulnerable to movements in the market.

While an advisor is likely to recommend assets with a history of delivering strong returns, they’ll also help you develop a plan that enables you to meet whatever cash and other needs you have on the horizon while aiming to keep your investments growing steadily over the long term.

4. Provide Tax Management Strategies 

A lot goes into managing tax obligations; the more assets and accounts you have, the more you may have to consider. An advisor with expertise in tax planning can simplify this process for you and help you manage your obligations so that you don’t surrender more than you need to. This can be done through various strategies such as charitable planning, tax-loss harvesting, and allocating investments to tax-advantaged accounts.

Some investments and investment accounts provide more favorable tax treatment than others. Partnering with someone who specializes in securities and understands the nuances of their tax implications can save you money, particularly over the long run.

5. Incorporate Your Values Into Your Plan 

Are you interested in making an impact with your investment dollars? What about supporting charitable causes? An advisor can help you allocate your investments according to your interests and philanthropic goals so that you can do well by doing good.

For example, if you’re concerned about climate change, you can invest in ETFs supporting clean energy businesses. If you’re passionate about equality in the workplace, you can invest in companies with high scores for diversity and inclusion. Are you committed to your faith? Some advisors specialize in Biblically Responsible Investing. Further, a financial advisor can help ensure that your values-based investments fit within the context of your financial goals.

Getting Started 

If you want to start working with a financial advisor, the first step is identifying the right advisor. Truly independent advisors are able to put your needs first in every circumstance because they are not beholden to any one company, product, or service. One key question you can ask is how the advisor is compensated. If they are compensated for selling you various investments, there may be a conflict of interest. If they are paid based on your account balance, then they will have an incentive to maintain that balance and increase the account value. Different advisors have different areas of expertise and offer various services, so determine your needs and consider doing the research before committing to one. In addition, many advisors and advisory firms provide free consultations and portfolio reviews, which may help you decide who best to partner with.

CoreLogic, https://www.corelogic.com/intelligence/reports/us-sp-corelogic-case-shiller-index-turns-the-corner-again-up-20-4-annually-in-april-but- down-from-march/ (2022, June 28)
S&P Dow Jones Indices, https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-continued-its-deceleration-in-july-301634369.html, (2022, September 27)

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