Helping women gain confidence
when dealing with money

Why Everyone Needs a Financial Advisor

by Nadene Salzman on January 7, 2013

financial adviserThis year, one of Oprah Winfrey’s favorite things was Microsoft’s Surface Tablet. In fact, she loved it so much she tweeted so from her iPad.  Though we may laugh at the irony, the Oprah Effect is real.  It’s highly likely Oprah’s endorsement will have a positive impact on Surface sales. Just look at her book club, which has resulted in many a subsequent bestseller.

When was the last time you bought something based on a friend’s recommendation?  Or endorsed a product or service yourself? A rhetorical question perhaps, but ultimately, we’re talking about a combination of herd mentality (think of the ‘Like’ button on Facebook) and the psychology of influence. Our brains are hard-wired to accept the general consensus of the world. The dotcom bubble and subprime mortgage bubble are just two examples. Did you jump on the bandwagon and invest in tech stocks prior to 1999? Did you borrow more than you could afford prior to 2008? Did you upgrade to the iPhone 5 as soon as it was released? We’ve all made those decisions and, in retrospect, realized maybe we shouldn’t have.

Do You Need a Financial Advisor?

When people ask whether I think they need a Financial Advisor, my answer is in the form of a question. When you consider all the investment changes that you made in your portfolio in the last several years, why did you make them? Sometimes I get a straight answer, but sometimes I get questions around helping them justify their decisions.

For those people, I recommend a Financial Advisor. An advisor can help them set some parameters around their decision-making, taking into account both traditional investment philosophies and their emotional attachments.

It’s been proven that emotions drive most decisions, investment and non-investment alike. It’s my job to help my clients manage all the market noise and remain focused on productive behavior and the execution of a well-devised plan.

The Job of a Financial Advisor

I’m the mentor, the advisor, the planner, the financial therapist, the “who ya gonna call” during volatile periods. I’m the person who realizes capital gains this year instead of next when cap gains rates are due to rise. I’m the person who tells you to update your will and make certain you have guardianship provisions for your children.  I’m the person who says you have to cut your spending if you want to retire earlier than planned.

I help you consolidate old retirement plans and avoid front-loading your 401K. I look at your stock options and help you determine when exercise is optimal. I help you determine your monthly burn rate (what you’re spending) and then determine if it’s a sustainable number. If it’s not, I’m the person who helps you decide which items are non-negotiable and which have to be reduced or eliminated altogether.

You’ll come to me to determine how long it will take to pay off your mortgage, whether you should pay it off at a faster rate, or if you can earn more in the markets. Do you have a succession plan for your business? Do you have enough uninvested cash for those “what if” scenarios?  There are so many reasons why a Financial Advisor is one of your most important assets. I’m here not only to restore your confidence when you wake up in a cold sweat after the market has lost 200 points and feel the impulsive need to cash out, but also to assist when there’s a sale on Wall Street and Apple is half price (don’t bet on it!) and you want to buy more.

I recently decided to buy the iPad Mini. According to the Business Insider, it’s too expensive. I know I don’t really need it but I do really want it. Some would say if I want a device between my iPhone and my Mac, I can get the iPad. But I want something new and novel, something playful and useful, with a great pedigree. So why shouldn’t I buy it? Everyone else is, right? And according to a friend of mine who works for Apple, and I quote, “These things are hotter than Cabbage Patch Kids were back in the day.” We’re all subject to less-than-practical impulses. When it comes to choosing and maintaining a plan towards your long-term goals, though, it’s helpful to have a trusted partner to help cooler heads prevail.

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