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What Financial Benchmarks can a Financial Advisor Help you Achieve?

Most people often embark on their financial journey without an exhaustive plan. According to CNBC, more than 53% of American adults said that the thought of money makes them anxious as they do not have sound advice and a holistic financial plan in place. However, it is not wise to begin a long monetary journey without appropriate guidance. Matters of money are often complicated. Hence, the experience and expertise of a financial advisor can help you build a strong foundation for your future years by enabling you to achieve adequate financial benchmarks.

Here are some financial benchmarks that your financial advisor can help you achieve:

  1. Freedom from debt
  2. Debt is complicated and often strains your finances by creating obstacles between you and your financial goals. The complex processes, multiple stakeholders, and rules can cause several issues. Also, the greater the debt, the less efficient your progress will be towards your monetary targets. So, the ultimate objective is to become debt-free by constructively managing your financial responsibilities. Your financial advisor can enable you to achieve this benchmark by effectively managing your debt. Your advisor can offer you step-by-step guidance to reduce your liabilities and ultimately make you debt-free. On the other hand, when you do not have any outstanding liabilities, you are better equipped to fulfill your long-term aspirations. Financial advisors can assess your financial condition, enlist your assets and liabilities, and accordingly create a custom plan that aims to minimize your debt and eventually eliminate it. Furthermore, your financial advisor can also help you bridge your income gap, enabling you to save more and eradicate the need for external monetary assistance.

  3. Higher savings
  4. Savings are the foundation of a secure future and an important benchmark. According to experts, the average person should save at least 10-15% of their income. This is different from the emergency fund that should comprise at least three months of your monthly expenses. That said, it is not easy to fulfill your savings target unless you adequately track your expenditure. Your financial advisor can help you achieve your savings goals by creating a precise budget that enables you to spend prudently and save more. The advisor can create a zero-budget, where each defined dollar has a specific purpose and is spent optimally. Such a budget can adequately support your current lifestyle, as well as reserve enough funds for the future. A financial advisor can also guide you on how to best spend your income and contribute better towards savings. They can assist you in finding ways to comfortably fund major life expenses like organizing your child’s wedding, buying a house, setting up a business, covering the costs of higher education, etc. Moreover, advisors consistently remind you to stick to your set budget and not miss your savings target.

  5. Strong portfolio
  6. It is not only important to save, but it is also critical to allow those savings to grow at their maximum potential. For this purpose, it is vital to have a solid investment management strategy. It may be advisable to construct a portfolio that is appropriate to your current life stage and is in line with your future financial goals. A portfolio that is in sync with your risk tolerance level will ensure that the volatility of the market has a minimum impact on your investment. Your financial advisor can enable you to do this. They can create precise investment strategies and make sure that the asset allocation in your portfolio meets your risk appetite. Furthermore, the advisor can aim to optimally diversify your portfolio so that it can withstand market volatility, ensuring better accumulation of wealth in the long-run. Financial advisors have years of experience in their fields and hold the necessary qualifications to help you identify profitable investments. They understand your requirements, evaluate your risk-tolerance, determine the life-stage you are in, and then devise an appropriate investment plan. Your advisor also keeps track of your portfolio performance and regularly apprises you of its details.

  7. Holistic tax plan
  8. Taxes consume a big part of your income and retirement savings. But it is possible to reduce your tax liabilities. Your financial advisor can draft a wise tax plan to ensure that you pay minimum taxes. Such a plan can include withdrawal strategies for retirement savings accounts like the 401(k), Individual Retirement Account (IRA), etc. A financial advisor can also suggest tax-aversion strategies for capital gains, retirement savings, insurance policies, inheritance, and other assets. Their objective is to create a sound tax plan that eventually reduces your tax burden.

  9. Secure retirement
  10. A significant financial benchmark that you must aim to achieve is to secure the golden years of your life. Retirement planning can be daunting and often complex with multiple savings options, rules, processes, etc. Hence, to ensure an adequately funded retirement, it can help to engage with a financial advisor. A financial advisor can create a holistic and feasible retirement plan accommodating your current income, financial liabilities, years left for retirement, and present and expected standard of living. Further, your advisor can make sure that you remain focused on your savings goal so that your retired years are comfortable. These professionals have expertise in managing retirement savings accounts like an IRA (Individual Retirement Account), 401(k), Roth IRA, and more. Your advisor can aid you in maximizing your contributions, availing tax benefits, as well as evading penalties and unnecessary taxes during the withdrawal of retirement funds. They also help you identify secondary income sources, apart from Social Security benefits, to support your retirement lifestyle. Financial advisors can assist you in setting up protection trusts, leveraging home equity, and optimally using government aids.

  11. Long-term care
  12. Important financial benchmarks that most retirees forget to adequately plan for are their medical needs and long-term care. According to HealthView Services, a physically fit retiree aged 55 will spend, on average, $13,165 in annual medical charges. This figure rises to $16,635 if the retiree has a medical condition like diabetes. These estimates are exclusive of long-term care costs, which, as per reports, are likely to be required by at least 70% of people above the age of 65 at some point in their life. With a financial advisor’s support, you can secure your health, long-term care goals, as well as reduce your medical expenses in retirement. Your advisor can help you pick out the right healthcare insurance plan and help you make the most of a Health Savings Account (HSA), Medicare, Medicaid, private health insurance plans, health insurance exchanges, COBRA (Consolidated Omnibus Budget Reconciliation Act), etc.

To sum it up

Overall, the contribution of a financial advisor in helping you achieve your financial benchmarks is unparalleled. From making a budget and saving to investing, making withdrawals, and paying taxes, a financial advisor can assist you through it all. All investors can significantly benefit from the services of a financial advisor.

If you need guidance on how to manage and create a financial plan for your future years, reach out to a qualified financial advisor in your area to help you build a strong financial foundation.

William Hayslett

William is currently a member of the Paladin Registry Publishing Team. He comes from a diverse background of financial services and consumer relations Industry. William holds a Bachelor’s of Arts in Economics that he received from Allegheny College, with specialized coursework in finance and marketing. He has also earned state licensing for fixed annuities and life insurance, and has worked with advisors in the past on mutual fund and variable annuity marketing.

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