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How Can A Financial Advisor Help You Through A Crisis?

I have received so many calls from concerned  clients throughout this pandemic.  Many have asked if they should sell everything and go to cash, and some did not feel comfortable with their asset allocation after the market dropped.  I have also seen many clients who are concerned about repaying student loans, and want to know the best options in light of the suspended payments over the next couple of months. This whole crisis has caused many people to realize that they need the services of a financial planner.  When you work with a financial planner, you can feel confident that you have a plan in place that works when the markets are up, and also protects you during the downturn.  Comprehensive financial planning is a process and not a one time solution.  The plan that you make today can change tomorrow as life circumstances evolve.

How can a financial advisor help you navigate a crisis like this?  Many events occur throughout your lifetime that you just can't control.  Unemployment is the highest it has been in a long time, and many clients have had to take pay cuts.  Other clients are concerned about their retirement, and are wondering if they need to start saving more, and some are worried about how to best fund their children's educations.  Having a plan in place can help to alleviate these concerns.  Some things that a financial planner can do for you include the following:

  • Review of your current asset allocation and making sure that your portfolio is properly diversified and invested considering your risk tolerance and time horizon
  • Evaluating whether you should refinance your home
  • Review and recommend the best strategies for repaying your student loans
  • Evaluate your current life and disability insurance to make sure you are covered in the event of death or disability
  • Reviewing your estate planning documents to make sure you have what you need in place
  • Create a budget and an adequate emergency fund
  • Recommending savings for college funding and retirement to help you to achieve your financial goals

There are many misconceptions people have about working with a financial planner.  Some are worried that they will be sold products or services that they do not need.  As a fee-only comprehensive financial planner, I do not accept commissions or fees for any products or services that I recommend. I can truly act as a fiduciary and in your best interest.  Some financial planners will say that they are fee-based or use other terminology, but they may be compensated for selling or recommending products that you do not need, and are not the best fit for you.

Some potential clients worry that they cannot afford to consult with a financial planner. They assume that only the "rich" can afford to use the services of a financial advisor.  This could not be further from the truth. Most people can benefit from the advice of a financial planner early on so that they can start saving and benefit from the time value of money. Also, sometimes people make the wrong decisions early on that can negatively impact their financial plans.  I have had people consult with me on student loans that have made decisions years ago that can not be reversed, and they end up paying substantially more over the life of their loan.  I have also had clients contact me that are invested in funds through their 401K or brokerage account that have really high expense ratios that detract from the returns on these investments. They could have easily invested in low cost index funds to accomplish the same goal and have achieved a better overall return.  

After going through what we are currently experiencing, most people would have weathered this better if they had a solid financial plan, and an advisor to consult with to explore their options during this difficult time.  If this is something that you have been thinking about, now may be a great time to get a plan in place.  The future is uncertain, but at least you can have a plan that can help you to weather the storm.

About the Author

Patti Hughes is a Chicago Fee-Only Financial Planner.  Lake Life Wealth Advisory Group provides comprehensive and objective financial planning, retirement planning, and investment management to help clients organize, grow and protect their assets through life’s transitions.  She is a fiduciary, and does not sell products or earn commissions, so she truly acts in the best interests of her clients.