Allworth Advice: The value a financial advisor can provide
L.B. from Dearborn County: I know you’re advisors, so I can probably guess your answer to this – but what’s the value of working with an advisor? Wouldn’t I save a lot of money just doing my finances myself?
Answer: It might surprise you that we’re about to say this, but not everyone needs a financial advisor. Some people enjoy working with numbers, have the time for it, and, quite frankly, are really good do-it-yourselfers. However, most people don’t fall into this camp.
Simply put, a qualified fiduciary financial advisor can help you the most in two ways: First, he or she can add actual value to your portfolio (4% or more in returns per year, on average, according to some studies) through things like dynamic investment strategies and portfolio construction, forward-thinking tax planning, ongoing analysis and rebalancing, among others.
Second, he or she can provide more qualitative value that is hard to put a price on. For example, by providing you with a comprehensive financial plan, an advisor can provide you with advice about debt management and Social Security claiming strategies, help with family finance goal setting, guidance for estate and legacy planning and more. Most importantly, he or she can help prevent you from making financial mistakes from which you cannot recover.
So, while not everyone requires the services of a financial advisor, doesn’t it sound nice to have an ally and advocate who can take that big, heavy weight off your shoulders? Because we think that’s pretty valuable. The key; make sure he or she is a full-time fiduciary.
F.S. in Monfort Heights: Do you recommend a credit freeze or credit monitoring?
A: While both of these are tools that help you protect your personal information, there are two key differences we want to point out: Credit monitoring is a service that you typically have to pay for (credit freezes are free); and credit monitoring does just what its name describes – it only monitors your credit report for things like suspicious activity or potential errors. Unlike a credit freeze, it won’t lock down your credit or prevent scammers from opening accounts in your name,
Therefore, if you’re going to pick just one of these options, we generally recommend credit freezes over credit monitoring. You’ll have to separately put a freeze in place with all three credit bureaus (Experian, TransUnion, and Equifax), but it’s a fairly painless process. And, again, it’s free.
Of course, the big caveat here is that if a lender needs access to your credit – say you’re opening a new credit card, taking out a mortgage, or getting a car loan – you’ll need to temporarily ‘unlock’ (or, ‘thaw’) your credit freeze for whichever bureau the lender uses. So, be sure you keep your PIN for each freeze in a safe place.
We should also note that you can actually access your credit report for free at annualcreditreport.com from each of the three bureaus every 12 months. So, in a sense, this can serve as an alternative way to monitor your credit report without buying a service. If you space it out correctly, you could have the whole year covered (for example, pull from Experian in January, TransUnion in May, and Equifax in September).
Here’s the Allworth Advice: Because credit freezes offer you stronger protection from scammers, we highly recommend putting them in place. But it can be beneficial to monitor your credit report as well.
Every week, Allworth Financial’s Amy Wagner and Steve Sprovach answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses is suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional adviser of his/her choosing, including a tax adviser and/or attorney. Retirement planning services offered through Allworth Financial, an SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call 513-469-7500.
This article originally appeared on Cincinnati Enquirer: Allworth Advice: The value a financial advisor can provide
