Why You Need a Financial Advisor

Bridget Handke, CFP®, CAP®
Mar 14, 2024 8:50:20 AM

If you have lived for several decades, your personal finances have likely become more complex. You may have accumulated various retirement accounts from different employers, including 401(k)s and IRAs. You might be planning to fund higher education for your children. You will want to balance these expenses with your long-term financial goals.

Not only that, your parents are also aging. You may find yourself in the role of caretaker, handling complex healthcare and financial decisions. This responsibility adds another layer of financial and emotional stress.

You may be at the peak of your career, earning your highest income to date. Your high-income status presents unique tax challenges and opportunities that, when managed strategically, may help minimize your tax liability and maximize your wealth-building potential.

Managing your financial situation efficiently while optimizing your investment strategy and minimizing taxes becomes increasingly important as you approach retirement, and it may be time to seek professional guidance from a financial advisor.

What Can a Financial Advisor Do for You?

Given the complexity of your life, it may be time to find a financial advisor to help you manage all the pieces of your personal finances so you can make the most of your resources. A financial advisor can provide valuable assistance with:

  1. Comprehensive Financial Planning: Help you develop a holistic financial plan that takes into account your income, assets, goals and your unique financial situation.
  2. Retirement Planning: Create a strategy that aligns with your retirement goals, income needs and tax optimization. Ensure you are on track to retire comfortably.
  3. Investment Management: Design and manage an investment portfolio tailored to your risk tolerance, time horizon and financial objectives. Optimize asset allocation and investment selection.
  4. Tax Optimization: Implement tax-efficient strategies to minimize tax liability over time, including asset location, tax-efficient investments, strategic withdrawals and conversions, and tax-loss harvesting.
  5. College Funding Strategies: Assist in planning for your children's education expenses by recommending suitable savings vehicles like 529 plans and Coverdell ESAs.
  6. Estate Planning: Review estate plans to ensure efficient wealth transfer, minimize estate taxes and provide for your heirs according to your wishes.
  7. Insurance Assessment: Evaluate your insurance coverage, including life insurance, long-term care insurance and disability insurance, to ensure you are adequately protected.
  8. Tax-Efficient Withdrawal Strategies: Develop a plan for taking withdrawals from retirement accounts and taxable investments during retirement to minimize taxes and complete strategic Roth IRA conversions.
  9. Social Security Optimization: Evaluate when and how to claim Social Security benefits to maximize your lifetime benefits, considering factors like age, health status, working status and spousal benefits.
  10. High-Income Tax Planning: Develop strategies to manage high-income tax implications, including deductions, credits and investment choices.
  11. Charitable Giving: Optimize your charitable contributions by exploring tax-advantaged giving methods such as donor-advised funds and qualified charitable distributions (QCDs).
  12. Regular Financial Reviews: Conduct periodic reviews of your financial plan and portfolio to ensure they align with your evolving goals and circumstances.
  13. Emergency Planning: Help you establish an emergency fund and a contingency plan to address unexpected financial challenges.
  14. Behavioral Coaching: Provide emotional support and guidance during market fluctuations or periods of financial stress, helping you make rational financial decisions.
  15. Education and Empowerment: Educate you about financial concepts and empower you to make informed decisions regarding your financial future.

A skilled financial advisor can play a pivotal role in helping you navigate the complexities of your financial situation, make prudent financial decisions and work confidently toward achieving your long-term financial goals.

The Fiduciary Standard

Understanding Fiduciary Duty

Not all financial advisors are fiduciaries. A fiduciary financial advisor is legally obligated to act in your best interest. This duty ensures that your advisor prioritizes your financial well-being above all else, providing advice and making recommendations that serve your interests.

Fiduciary advisors are committed to avoiding conflicts of interest that could compromise your financial goals. They should disclose any potential conflicts and be transparent about their compensation structure.

Consider working with a fee-only financial advisor who charges a transparent fee for their services rather than one who earns commissions for selling specific financial products. This fee structure minimizes conflicts of interest.

Remember that not all advisors are fiduciaries. If you aren’t sure, ask them. And ask them if they are fiduciaries when managing all your accounts.

The Search for Your Ideal Fiduciary Financial Advisor

What should you look for when hiring a Financial Advisor?

Credentials and Experience

Look for advisors with recognized credentials like Certified Financial Planner™ (CFP®) or Chartered Financial Analyst® (CFA®) and extensive experience working with clients in situations like yours. An ideal situation is a team that includes both CFP®s credentialed in all aspects of money management, paired with a CFA® credentialed specifically in investments.

<<Learn more about the Birchwood Team and their credentials and experience.

Personal Compatibility

A strong and effective financial advisor-client relationship includes open and honest communication. Choose someone you trust and feel comfortable discussing your financial concerns and goals with. Transparency is key to addressing your unique financial needs.

Trust and Confidentiality

Your financial advisor will have access to sensitive financial information. It's imperative that you have complete confidence in their ability to keep your information confidential and secure. A trustworthy advisor will prioritize your privacy and security.

Understanding Your Values and Priorities

Your financial goals are not solely numbers-based; they reflect your values, aspirations and life priorities. A compatible advisor will take the time to understand your values and how they influence your financial decisions, ensuring that your financial plan aligns with your beliefs.


A compatible financial advisor will tailor their advice and recommendations to your unique circumstances. They won't provide cookie-cutter solutions but will create a financial plan customized to your income, assets, goals and risk tolerance.

Respect for Your Input

A compatible advisor values your input and respects your decision-making process. They won't pressure you into making choices that don't align with your comfort level or financial objectives. They will provide guidance and empower you to make informed decisions.

Long-Term Perspective

Financial planning involves long-term strategies. A compatible advisor is committed to maintaining a long-term relationship with you, ensuring your financial plan evolves as your circumstances change. Does your advisor work alone or with a team? What is their succession plan for when they retire? Will you be looking for a new advisor just as you are retiring? 


Consider whether your advisor is available when you need them. Are they responsive to your questions and concerns? A compatible advisor understands the importance of being available to address your financial needs promptly.

Ethical Alignment

Shared values, such as a commitment to ethical financial practices and responsible investing, can enhance the compatibility between you and your advisor. Knowing that your advisor's principles align with your own can provide peace of mind.

Comprehensive Services

Ensure your advisor can provide comprehensive services that address your needs, including retirement planning, college funding, estate planning and tax optimization.

Customized Financial Plans

Your financial advisor should tailor their recommendations to your unique financial situation, considering your income, assets, goals and risk tolerance.

Questions to Ask a Potential Advisor:

When choosing a financial advisor, ensuring they are a good fit for your specific financial needs and goals is essential. Here are questions to ask a potential financial advisor to help determine if they are the right fit for you:

  1. What Is Your Professional Background and Credentials?
    Ask about their education, certifications (e.g., CFP®, CFA®) and years of experience in financial planning and investment management.
  2. Are You a Fiduciary? Are You a Fiduciary for All Assets?
    Confirm whether they are legally obligated to act in your best interest and avoid conflicts of interest. This obligation ensures they prioritize your financial well-being.
  3. How Are You Compensated?
    Understand their fee structure. Are they fee-only, fee-based or commission-based? Ensure you're comfortable with their compensation model.
  4. What Is Your Investment Philosophy?
    Ask about their investment approach and philosophy. Are they aligned with your risk tolerance and long-term goals?
  5. What Services Do You Offer?
    Ensure they offer the specific services you need, such as retirement planning, college funding strategies, tax optimization and estate planning.
  6. How Do You Stay Informed About Market Trends and Tax Laws?
    Ask about their commitment to staying updated with market trends and changes in tax laws that may affect your financial plan.
  7. Can You Explain Your Approach to Risk Management?
    Understand how they assess and manage risk in your investment portfolio and your overall financial plan.
  8. How Often Will We Communicate and Review My Financial Plan?
    Clarify the process for financial plan reviews as well as the frequency and method of communication to ensure it aligns with your preferences.
    <<We've detailed each step of our process for becoming a Birchwood Client
  9. What Sets You Apart From Other Financial Advisors?
    Ask about their unique value proposition and how they differentiate themselves from other advisors in the industry.
  10. Have You Worked With Clients in Similar Financial Situations?
    Ask about their experience working with clients with similar financial circumstances such as complex tax situations, college funding needs and estate planning concerns.

These questions can help you assess the advisor's qualifications, approach and compatibility with your financial goals and preferences. Open and transparent communication with any potential financial advisor is essential to make an informed decision about who to trust with your financial future.

Personal compatibility with your financial advisor is more than just numbers; it's about trust, communication, and a shared commitment to achieving your financial goals. When your advisor understands your values, respects your input and tailors their advice to your unique situation, you're more likely to have a successful financial advisory relationship. Take the time to find an advisor who aligns with your personal preferences and financial objectives, and you'll be ready to navigate the complexities of your financial journey.

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Investment Advisory services offered through Birchwood Financial Partners, Inc. an SEC Registered Investment Advisor.

All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Opinions expressed herein are solely those of Birchwood Financial Partners, Inc., and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions. We are not affiliated with or endorsed by the Social Security Administration or any government agency. The inclusion of any link is not an endorsement of any products or services by Birchwood Financial Partners. All links have been provided only as a convenience.