Why a Long-Term Relationship with Your Financial Advisor Can Benefit YOU

In my opinion, everybody can benefit from a financial plan, because every aspect of your life has an effect on your finances and your financial future. Your goals, your life circumstances and your personal wishes all have an impact on every area of your financial life.

If one of your goals is to purchase a home, for example, you need to be making a sufficient income to cover your bills and expenses and to still have enough left over to devote to a down payment. Once you purchase the house, its costs and any equity will have an impact on your overall net worth and your retirement. It could then become part of your estate, to be passed on to children and other dependents or beneficiaries when you’re gone.

As this example shows, most aspects of a financial plan have long-term effects throughout your life. As a result, I strongly believe that the most beneficial relationship you can have with a financial advisor is a long-term one. In fact, I believe in this so strongly, that many of the relationships we at Financial Freedom have with our clients don’t only span lifetimes but across multiple generations. Yes, you can elect to go with short-term, hourly help about specific elements of your finances. But short-term advisors can’t help to the degree long-term advisors can. Here’s why:

Long-Term Financial Advisors Understand Your Entire Situation

A good financial advisor will understand your entire situation, which allows him or her to offer a comprehensive financial plan for every stage of your life, along with advice, education about the reasons behind the advice and actionable steps to reach your goals.

To provide a comprehensive financial plan, long-term financial advisors should discuss the following areas with you.

  1. Your life goals and objectives, what you want to accomplish for you and your family and if you want to leave a legacy for your family.
  2. Your overall income and expenses: A picture of your overall cashflow.
  3. Your investment plan: Your savings and investments and any goals you are saving for or plans that might affect savings and investments.
  4. Your retirement plan: The amount of savings you devote toward retirement, your tax situation and your goals for retirement, including at what age and whether you plan to move.
  5. Insurance: To protect against risk to your assets.
  6. A college plan: Whether you plan to save for the college education of children or grandchildren.
  7. An estate plan: The disposition of your assets and plans for your beneficiaries.

None of these pieces exist in isolation from each other and/or from significant life changes. If you have children, for example, your expenses may rise, decreasing cashflow. You may initiate a college savings plan. Both may affect the level and timing of your overall investments and retirement. All these factors, in turn, affect your estate plan in multiple ways.

Because a long-term financial advisor has an overview of all these aspects, he or she is able to optimize the advice given for each aspect and each goal you have. You don’t run the risk of receiving advice that focuses on just one area and could have a potentially negative impact on others. A short-term advisor, on the other hand, may provide retirement plan advice that leaves you without adequate college savings for your goals, or investment advice that ignores your goals of retiring early.


If you’re looking for a long-term professional relationship with a trusted financial advisor, contact Financial Freedom to see how we can help.


Your Temperament and Personality Also Affect Your Financial Planning

If you have savings and investments, your financial advisor should assess your risk tolerance.

What’s risk tolerance? Each type of investment, cash, bonds, stocks and mutual funds has a risk and reward profile. Your risk tolerance indicates your relative comfort with risk.

Cash and bonds have lower risk, because the price fluctuates little or not at all. The stock market (stocks, mutual funds, exchange traded funds) carries much more risk, as prices can be volatile. Stocks also have the potential to provide handsome returns, though, so the risk can be counterbalanced by the potential reward.

As you move through life, both your risk tolerance and a prudent risk-reward-ratio for your portfolio may change. People in their younger years, for example, may have a higher risk tolerance because they have a lengthy time horizon to make up any drops in the stock market. People nearing retirement, on the other hand, may recalculate their risk tolerance, because they may not have a long time horizon to make back money lost due to declining markets.

A long-term financial advisor can specifically assess your risk tolerance based on your finances, goals, age and personal comfort level.

You Can Easily Change Your Plan(s)

Many events can cause you to want or need to change your financial plans. Milestones in your life, such as marriage or the death of a parent, for example, can be the impetus for changes to your financial or life goals and can change both your overall assets and your plan for them.

A long-term financial advisor will have an ongoing awareness of your life goals, milestones and finances, so you can change your plan to accommodate all of these conveniently, with a person who understands your circumstances.

A long-term financial advisor should provide you with regular reviews of your portfolio and the overall market. This may also include the need for portfolio rebalancing or changes in specific investments.

A Long-Term Financial Advisor Can Anticipate Future Needs

A long-term financial advisor can work with you to anticipate future needs, concerns and issues. If you and your partner are expecting a child, for example, a financial advisor can proactively ask about plans for college savings, life insurance and a will or living trust to provide for a smooth transition of your estate.

Because a long-term financial advisor knows your risk tolerance and goals, he or she can also proactively inquire if you want to change the asset allocation in your portfolios or whether you want to increase retirement savings as the stock market picture changes or you grow older.

A Long-Term Financial Relationship Builds Trust

There’s no substitute for peace of mind. By working with a financial advisor over the long term, we have seen from experience that investors feel more at ease and comfortable that they trust what is happening with their financial nest egg.

At Financial Freedom, we take our client relationships to heart and regularly work with the children of clients, as we know where they come from and what they want for the future at an early age. Contact us to see how Financial Freedom can help.


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Filed Under: Comprehensive Financial Planning, fiduciary, retirement planning