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When Should I Get a Financial Advisor?

It’s always a good idea to look into working with a financial advisor, not only to improve your own finances but also to foster a valuable relationship that can last a lifetime. Still not sure if the time is right? Here are three key life events during which you should seek financial advice.

Starting a High-Income Job

When most people first get into their professional career, they experience a number of changes relating to their financial situation. There are numerous other financial planning considerations that should be addressed at this point in time, such as:

  • Determining how much should be saved in the 401(k)/retirement plan
  • How much needs to be saved for other personal financial goals and in which type of accounts
  • The benefits package as it relates to things like stock options, stock purchase plans, types of health insurance, and other elective benefits that are often forgotten or not addressed fully  

If you’re getting a significant pay raise, tax brackets are another concern. Pushing into a higher tax bracket can make a big impact on how much income tax will need to be paid in a year. Making sure you don’t have a mammoth surprise at tax time is also quite important. Differing situations are almost impossible to generalize, so having a competent tax planner working directly with your financial advisor can often save you money as well as lower potential surprises.

The biggest opportunity we see missed relates to equity, meaning ownership of your employer, and how to responsibly buy into your employer. Make sure you don’t have too many eggs in one basket, or you’ll be risking a situation like that which occurred with Enron years ago. This strong company essentially instantaneously lost all its value due to accounting practices—not employee work ethic. Many times, these equity benefits are very large parts of compensation, and responsibly accumulating them by keeping an eye on risk management is a big opportunity.

Starting a Family

Beginning a family is a major decision, both personally and financially. Financial topics that should be addressed are:

  • Planning for child care costs
  • Possible college savings
  • Disability and life insurance for both parents (very important to analyze)
  • School districts and whether moving into a new school district is a goal on the horizon

Setting up even a simple will is often overlooked when starting a family. If the parents happen to pass away unexpectedly, a guardian needs to be named for the minor child. Otherwise, the government effectively gets to control who would be the legal guardian of the child.

Life and disability insurance are also essential. Statistically, the maximum need for life insurance occurs at the conception of your final child. This is because children come with large financial costs to the parents, and if there were an unexpected death, protecting the family against the lost remaining working years is exceedingly important. Life insurance, while expensive, helps achieve this goal.

For the same reason, disability insurance is also extremely important for the parents to have, as it is roughly four times more likely that someone becomes disabled than passes away. Protecting against future income that won’t be earned is imperative. A financial advisor will be able to walk a developing family through many of these thought processes and difficult decisions.

Considering Retirement

Perhaps the most obvious use for a financial planner is when people are starting to consider retirement. Financial advisors very commonly work in this type of situation and help answer the question, “Am I strong enough financially to retire now?” and, if the answer is no, “What needs to be done to get there and in how long?”

Ideally, this process would be started much earlier in life, but the reality is that many people wait until later in life to really focus their time and energy on this conversation. Still, ensuring you have financial confidence when heading into retirement years, when you are no longer receiving a paycheck for going to work, is a major life decision. It can come with peace of mind or significant worry, depending on how strong your situation is.

Financial advisors can also give you advice relating to your date of retirement. People tend to enjoy their final years of work much more if they know they can quit any day they wish. What if you could have retired a year or two earlier and still been financially stable? Would you have chosen to do so? This is an analysis that people should complete as soon as possible, regardless of what they actually decide.

Of course, actually creating a plan to recreate income for retirees, especially in a tax efficient manner and without taking unnecessary risk, is the obvious goal—but this is so much more complicated than simply an investment question. Tax planning, Social Security planning, medical insurance planning, and many other subjects need to be taken into account at the same time.

How Can BFG Help You?

Regardless of your age or current financial standing, a financial advisor should be one of the most important people in your professional roster. At Berger Financial Group, our team prides itself on its diverse background that supports clients through all stages of life. Contact us to learn more about how we can support you every step of the way.

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