Why Do I Need a Financial Advisor?

TLDR Transcript: Here at Buffalo First Wealth Management, the question we get asked most often from prospective clients is “Why do I need a financial advisor?” or “What do you actually do?”

We love advising and guiding people through their financial lives, but we also know it can be difficult to understand the benefits of an advisor—especially for people who already know a lot about personal finance. With years being in this business, the response is often more than just investment management.

Here’s what makes working with a financial advisor so important, and how it can help shape your financial future.

1. An Objective, Stabilizing Voice

Money is the emotional object on which everything hangs. And even the most financially savvy people can find it difficult to make neat rational decisions in the midst of market volatility.

For example, we’ve witnessed experienced peers become ashen during significant economic events, like the collapse of the dot-com bubble or in 2008 when financial markets ground to a halt. Even with experience, the emotional burden of watching their portfolios drop prompted them to withdraw from the market at precisely the worst moment and they watched as it recovered without them.

An adviser is a stabilizer that gets in between. We offer the objectivity that’s necessary to stick with a long-term approach when emotions are high, so you don’t make emotional choices that can hurt your financial health.

2. Navigating Relationships and Finances

Money, as we well know, can be a major source of tension for couples. There is hardly any other couple where two partners have the same view to finance; usually one is a saver, while another spender.

An adviser helps fill this gap by providing structure around your financial life. When you establish the expectations and a plan, in the beginning, both partners can get on the same page. This perspective from a third party frequently works better than a husband trying to persuade a wife (or vice versa) and reduces disputes and emotional power struggles over financial planning.

3. Saving You Time

Are you too busy to manage your money, even if you know how? After full days at work and running the kids to various activities, people don’t want to spend their evenings reading up on economic releases or studying individual companies or monitoring market moves.

And then, the markets are always changing. IN the last four years, alone, we have had three substantial changes to tax law — and we’re not even counting here the Secure Act and Secure Act 2.0. Staying ahead of the IRS and modifying your strategy accordingly is a lot of work. An advisor takes this complexity off your plate so you can focus on what matters to you.

4. Advanced Strategic Planning

So many of our clients come to us at a crossroads in life — getting married, getting divorced, having kids or en route to retirement. And although they may have handled their investments on their own up to that point, many overlook advanced strategies for scaling their wealth.

Advisors will also introduce you to things that maybe you’re not using, like:

• Tax Loss Harvesting: Offsetting capital gains to reduce your tax bill.

• Direct Indexing: Holding the stocks in an index itself for more tax efficiency.

• Strategies for Donating to Charity: Considering Donor Advised Funds or QCDs.

• Roth Tactics: Making the most of conversions and backdoor contributions given current rules.

5. Avoiding Costly Mistakes

Cost is a common factor raised against using an adviser. But the price of getting something wrong — panicking and selling during a market downturn, not making the best use of tax benefits or neglecting to plan for long-term care — can be far higher than any fee you’ll pay for advice.

The internet has a lot of information, but that information is not tailored to you, and more often than not, it’s indifferent or adverse to your best interests. An advisor breaks down the data and tells you how you can feel good about your future.