Hiring a financial advisor is a meaningful decision. You may be fully capable of managing your
investments, paying your bills, and making thoughtful financial decisions on your own. But at some point, your financial life can become complicated enough that you no longer want to carry every detail by yourself.
Maybe your income has changed, or retirement feels closer than it used to be. Or perhaps your investment accounts, tax questions, estate plan, and charitable goals have begun to feel siloed, and you may benefit from a more coordinated approach.
If you’re considering hiring an advisor, you may be asking a very reasonable question: What am I actually paying a financial advisor to do?
The answer depends on the financial advisor, the firm, and the complexity of your situation. A comprehensive financial advisor can help you evaluate financial decisions within the context of your broader financial plan, stay organized, and remain focused on your long-term objectives.
Much of that work happens quietly, consistently, and behind the scenes. Here’s what that can look like.
Monitoring Your Financial Plan as Life Changes
Your financial plan should not be something that gets created once and then sits unchanged in a folder. This ongoing planning process is often a core responsibility of a CFP® professional.
Throughout the year, your financial advisor may monitor your progress toward financial goals. That means looking at things like savings, spending, cash flow, investment returns, income changes, major expenses, and family circumstances.
Ongoing planning involves both monitoring progress and evaluating how changes in your circumstances may affect future decisions and opportunities.
A promotion, job change, bonus, inheritance, new equity compensation package, or upcoming retirement date can all affect your broader plan. Your financial advisor can help connect those dots before small decisions become larger missed opportunities.
Keeping Your Investments Aligned With the Bigger Picture
Investment management is often an important part of an ongoing advisory relationship, but it is rarely the entire story. Your portfolio should support your financial goals, risk tolerance, time horizon, tax picture, and broader financial plan.
That may include:
- Reviewing asset allocation and rebalancing when appropriate
- Assessing concentrated positions and monitoring diversification
- Evaluating investment performance and costs
- Managing cash
- Identifying tax-loss harvesting opportunities
For high-net-worth households, investment questions can become more complex. Employer stock, private investments, restricted securities, multiple account types, and legacy assets may all require a more coordinated approach.
Looking for Tax Planning Opportunities Before Year-End
Taxes are one of the clearest examples of why ongoing advice matters. Many tax decisions are most useful when they are considered before the year is almost over.
Your financial advisor may work with you and your tax professional to identify tax-planning opportunities and discuss how various strategies may affect the after-tax impact of financial decisions. Depending on your circumstances, that may include:
- Tax-loss harvesting
- Roth conversion analysis
- Charitable giving strategies
- Managing the tax impact of concentrated stock
- Coordinating investment sales
A December conversation can still be valuable, but some opportunities require earlier planning. When your financial advisor is paying attention throughout the year, they can help identify those moments while there is still time to act.
Helping You Navigate Major Financial Decisions
Some of the most important moments in a financial advisory relationship happen when life presents a decision that does not fit neatly into one category.
You may be deciding whether to exercise stock options, sell company stock, change jobs, retire early, buy a second home, help your children financially, make a large charitable gift, or take a major distribution from an investment account.
Those decisions can affect every area of your financial plan. A comprehensive financial advisor helps you look at the decision from multiple angles before you act.
Coordinating the Moving Pieces of Your Financial Life
As wealth grows, financial life often becomes more fragmented. You may have:
- A 401(k) from a former employer
- An IRA or several taxable investment accounts
- Equity compensation
- Cash reserves
- Trust accounts and estate planning documents
Each account or strategy may have a different purpose, tax treatment, set of rules, and role in your overall plan. Your financial advisor can help evaluate how those pieces work together.
That may include which accounts should hold which investments, which accounts to draw from first in retirement, what may be worth consolidating, and how each decision could affect taxes or future flexibility.
Watching for Risk You May Not See Right Away
Risk is not limited to whether the market goes up or down. Your financial life can carry risk in many forms, including:
- Insurance gaps
- Concentrated investments
- Insufficient liquidity
- Outdated estate documents
Throughout the year, your financial advisor may help evaluate whether your current level of risk still makes sense.
Working With Your Other Professionals
Your financial advisor is often one member of a larger professional team. You may also work with a CPA, estate planning attorney, insurance professional, or other specialists. Your financial advisor can help coordinate those relationships, so your advice is not happening in silos.
For many families, this coordination is one of the most underappreciated parts of wealth management. It may help streamline communication among your professional advisors and provide additional context for important financial decisions.
Handling the Administrative Details
Wealth management includes both strategic planning and the administrative work required to implement and maintain those decisions.
Depending on the services your firm provides, your advisor and their team may help with opening and transferring accounts, managing paperwork, coordinating account transfers, updating beneficiaries, following up on outstanding recommendations, and tracking implementation items.
Having someone responsible for helping organize and move those details forward can reduce the mental load of managing your wealth.
Communicating When Something Needs Your Attention
An advisor should not expect you to monitor every account, deadline, tax opportunity, or planning issue on your own. Part of the relationship is helping determine what actually needs your attention.
You may hear from your advisor if a tax-planning opportunity emerges, or your equity compensation requires a decision. You may also want to touch base if a major life event could change your plan.
The goal is to keep you informed without asking you to spend your free time tracking everything yourself.
What Does This Look Like Month to Month?
There usually is not a perfect monthly checklist because comprehensive advice should respond to what is happening in your life.
One month may involve reviewing your portfolio and preparing for a tax decision. Another may involve helping you evaluate a job offer with equity compensation. A quieter month may involve monitoring your plan and investments while nothing requires immediate action. That ongoing attention is part of what you are paying for.
A typical year might include:
January through March: Reviewing the prior year, evaluating your current plan, making investment adjustments, and identifying planning priorities for the year ahead.
April through June: Reviewing tax-related opportunities, evaluating cash flow and savings, revisiting investment strategy, and addressing major financial decisions on the horizon.
July through September: Checking progress toward financial goals, reviewing portfolio positioning, evaluating changes in income or compensation, and making adjustments as needed.
October through December: Focusing on year-end tax planning, charitable giving, investment gains and losses, equity compensation decisions, and priorities for the coming year.
Of course, your actual experience will depend on your circumstances and how your advisor structures the relationship.
So, What Does a Financial Advisor Actually Do?
The answer will vary depending on the advisor and the services they provide, but in a comprehensive wealth management relationship, an advisor generally helps clients:
- Evaluate and help implement important financial decisions
- Coordinate investments, taxes, retirement planning, and estate planning
- Identify planning opportunities throughout the year
- Monitor progress toward long-term goals
- Manage investment portfolios
- Coordinate with other professional advisors
While some of that work happens during scheduled meetings, much of it occurs throughout the year as circumstances change, opportunities arise, and decisions need to be made.
Final Thoughts
Your advisor should help you understand your financial picture, evaluate important decisions, coordinate the moving pieces, and spend less time managing the details yourself.
Meetings, reports, and portfolio reviews are visible parts of an advisory relationship. Ongoing planning often occurs behind the scenes through activities like portfolio reviews, tax planning discussions, coordination with CPAs and attorneys, implementation of recommendations, and evaluation of important financial decisions before deadlines arise.
For someone with significant wealth and a complex financial picture, having a professional continually monitoring the details, connecting the dots, and helping coordinate financial decisions can be an important part of the planning process.
That is ultimately what an ongoing advisory relationship should provide: a trusted professional who knows your financial life, stays engaged throughout the year, and helps you make the most of the wealth you have worked hard to build.
Take the Next Step
Whether you're evaluating your current advisory relationship or exploring professional guidance for the first time, a conversation can help clarify where you stand.
At Plancorp, we help successful individuals and families align their wealth with the goals and values that matter most to them. Our team works with clients to bring clarity to complex financial decisions, identify planning opportunities, and create a coordinated strategy across investments, taxes, retirement planning, estate planning, and more.
If you'd like a second opinion on your current financial strategy or want to explore whether a more comprehensive approach could benefit your situation, we'd welcome the opportunity to talk.
Schedule a complimentary strategy session to discuss your financial goals, your questions, and the opportunities that may be available to you.
