What Financial Advisors Actually Do

(& When You Need One)

For some people, following the stock market is fascinating. For others, it ranks somewhere between reorganizing the garage and reading the fine print on an insurance policy.

Fortunately, responsible financial management doesn’t require making money your hobby. It does require knowing enough to make sound decisions, recognize when you need expertise, and choose trustworthy people to help you.

Perhaps that’s the most useful way to think about financial advice:

You don’t have to become the financial expert on your team.
You do need to remain the leader of the team.

What Does a Financial Advisor Actually Do?

“Financial advisor” sounds like one clearly defined profession. In reality, people using financial-advice titles may provide very different services. Some focus primarily on investments; others provide broader planning across retirement, taxes, insurance, estate considerations and long-term goals.

So before searching for an advisor, start somewhere else: What do I actually need help with?

Someone approaching retirement may need different expertise from a young family balancing debt, savings and insurance. A business owner may need another combination entirely.

Start with the need. Then look for the expertise.

Delegating Isn’t Abdicating

Here’s good news for those who don’t particularly enjoy studying investments: You don’t need to know everything your financial professionals know. That’s why expertise exists.

Think about leadership in any other setting. A good leader doesn’t need to perform every specialized job. The leader needs to understand the objective, choose capable talent, communicate priorities, ask good questions and recognize when different areas of expertise need to work together.

Your financial life isn’t much different.

An advisor may understand investments better than you do. Your CPA understands taxes. An insurance professional understands risk and coverage. An attorney may understand estate-planning structures.

But you know the life all of that expertise is supposed to serve.
That keeps you in the leadership seat.

A healthy relationship should allow you to say: “I don’t need to know everything you know. I do need to understand why and what you’re recommending.” Why this investment? This amount of risk? This insurance coverage? This strategy now?

Good delegation doesn’t mean handing over responsibility. It means putting expertise to work while remaining sufficiently informed to make the ultimate decisions.

One Advisor Doesn’t Have to Know Everything

Your financial needs may eventually involve several kinds of expertise. Your financial “bench” might include a financial advisor or planner, CFP® or an investment professional, tax accountant, insurance specialist or estate-planning attorney. And financial services continue to evolve. Emerging areas may sometimes require specialized knowledge beyond someone’s traditional training.

That doesn’t mean everyone needs a financial team worthy of their own conference room.

The goal isn’t to collect experts.
It’s to have the right expertise available for the
decisions you’re actually making.

Those professionals may work in different offices—or different parts of the country—and may not automatically know what the others are doing. Someone needs to recognize when their areas intersect. That someone begins with you.

A collection of experts isn’t automatically a team. Coordination turns expertise into a team.

Choosing Someone for Your Team

Credentials matter. So do philosophy, communication and trust. Before choosing someone, consider asking:

• What services will you actually provide?
• What experience do you have with people in circumstances like mine?
• How are you compensated, and what will I pay?
• When advising me, are you acting as a fiduciary?
• How will you explain recommendations and potential downsides?
• What happens when I need expertise outside your specialty?

Then notice more than the answers.

Does the person ask what matters to you before recommending strategies or products? Can they explain why? Will they tell you when something falls outside their expertise?

Trust grows when competence, transparency and
communication repeatedly give you good reason for it.

Money Is the Servant, Not the Master

This may be the most important perspective of all. The purpose of financial management isn’t necessarily to accumulate the largest possible number.

Money can provide security, prepare us for retirement, educate children, care for family, support causes we value, weather emergencies, create opportunities and build a legacy.

Those purposes affect what financial success looks like.

A good financial professional needs to understand what you want your money to accomplish in your life, not simply how much more of it might be accumulated.

Your values establish the destination.
Financial expertise helps you navigate toward it.

Put Your Financial Team on Paper

Here’s this week’s Gentle Practice. Take five minutes and sketch your current financial bench:

YOU — Team Leader: ____________

o Financial planning → __________
o Investments → __________
o Taxes → __________
o Insurance → __________
o Estate/legal → __________
o Other specialized expertise → __________

Empty spaces aren’t automatically problems. You may not need every kind of professional. Instead, look at the whole picture and ask:

✓ Do I know who handles what?
✓ Do the people advising me understand what matters to me?
✓ Do I understand why I’m following their recommendations?
✓ Would I know whom to call if an important financial question arose tomorrow?
✓ Do I recognize where the responsibilities of two team members might intersect?

You don’t have to become fascinated with finance to steward your resources well.

 Know the life you’re building.
 Choose expertise carefully.
 Coordinate it when necessary.
 Stay engaged in important decisions.

And remain the leader of the team.

Next Up: One Seat Worth Examining

There’s one line on that financial bench many of us can fill in—but may not be able to explain very well: Insurance.

We buy it hoping we won’t need it, sometimes carrying policies for years without revisiting them.

Next week, we’ll look at what kinds of insurance belong in a sound financial life, how much may be enough, and what questions we should be asking.

For now, there’s no need to master every financial specialty.

Know the life you’re building. Know who’s helping you build it.
And keep money in its proper place—serving the mission, never becoming the master.

“Let the wise listen and add to their learning and let the discerning get guidance.” — Proverbs 1:5

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