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Why It's Important to Work With a Financial Advisor

Earning money is hard work. Making it work for you and realizing your financial goals is even harder. That’s because the world of personal finance is complex.

Bringing in the services of a financial advisor can simplify your finances. You can reach your financial goals now and in the future.

There are numerous benefits to having a financial advisor. Here are the main reasons you’ll be glad you hired this kind of professional.

A walk in the forest

They Help Remove Emotions During Decision-Making

A financial advisor not only knows the ins and outs of the world of finance, but they also help you make well-informed decisions. Without them, many of the financial decisions you make are heavily influenced by your emotions.

Many investors follow others when buying a stock. This is a concept called the herd mentality or behavior. A case in point was the buying of the GameStop (a video game retailer) stock even when it didn’t make investment sense.

The purchase frenzy that ensued culminated in a short squeeze. Investors, especially beginners, bought the GameStop stock not because it was good but for emotional reasons. Big investment firms that bet against the stock rising lost millions of dollars.

Emotions are the reasons tons of people avoid creating and living by budgets. A financial advisor can help you make rational financial decisions because they're not emotionally involved.

They Help You Develop a Personalized Financial Plan

A financial advisor will help you develop a financial plan. As you probably know, you’ll unlikely achieve your financial goals unless you have a financial plan.

When you hire a financial advisor, they’ll work with you to develop financial goals and the associated plan. This involves evaluating your current finances, creating a spending plan, and developing savings and investing plans.

When you’re armed with a well-thought-out financial plan, your goals will be within reach.

They Help You Avoid Taking Unnecessary Financial Risks

Risk is one of the biggest threats to nailing your financial goals. Think of risk as the likelihood of losing your money. The area in which you’re likely to take unnecessary risks is investing.

It’s enticing when you spot an investment opportunity to make a higher-than-usual profit. Imagine what you’d do when you make the amount of money you’re hoping for.

Without proper financial advice, you may fall into the trap of investing your hard-earned cash in the opportunity. Due to little or no risk assessment, you may lose your money.

These are some risks your financial advisor can help you avoid. As you avoid taking unnecessary risks, the odds of nailing your financial goals increase.

They Assist With Asset Allocation

Investing multiplies your money, helping you reach your financial goals quicker. If you have limited investing knowledge and experience, you can fail to reach your goals or lose your money.

A financial advisor will assess your needs and help you develop an investment strategy. An asset allocation, dividing your money among investment instruments, plays a significant role in your investment strategy.

With the help of a financial advisor, you can select investment instruments suited to your needs and risk. As your life and needs change, a good advisor will be by your side to guide you on portfolio management and rebalancing.

They Help With Rebalancing Your Portfolio and Tax-Loss Harvesting

An investment portfolio changes over time. This will shift your asset allocation and change your risk exposure. As such, your new portfolio might not help you achieve your financial goals.

A good financial advisor helps you rebalance your portfolio so that you stay on track to achieving your goals.

Proper portfolio management includes optimizing taxes. One strategy that works well is called tax-loss harvesting or selling. It involves selling an asset at a loss to offset the gains you make in another.

This strategy reduces your overall gains. As such, you avoid paying a hefty short-term capital gains tax bill. To benefit the most from this strategy, the timing, which is where your financial advisor will come in, is crucial.


The financial mistakes you make may prevent you from reaching your financial goals. Hiring a financial advisor can help you avoid many such mistakes. As mentioned above, a good financial advisor will help you with:

●     making rational, instead of emotional, financial decisions

●     avoiding unnecessary risks

●     allocating assets effectively

●     developing a custom financial plan

●     rebalancing your portfolio and tax-loss harvesting

If you don’t have a financial advisor yet, I strongly suggest you go ahead and look for one you can hire. Your future self will thank you.

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