Less Than 10% of Americans Are Taking Advice From a Financial Advisor: 6 Ways That Could Be Costing You Money
When it comes to managing your personal finances, it can be daunting and confusing to know where to start. Many Americans rely on family and friends for financial guidance, but a recent survey conducted by GOBankingRates revealed that less than 10% of respondents receive professional advice from a financial advisor or personal accountant. While working with an advisor might come with a cost, it is an investment in your financial future that can pay out substantial dividends. Here are six ways that could be costing you money if you don’t have an objective third-party guiding you through your finances:
You Could Be Paying Too Much in Taxes
The U.S. tax code is complex, and without the necessary expertise, you could be missing out on serious tax savings. Tax loss harvesting is an example of a strategy that an advisor could utilize to help lower your tax bill. By selling investments that have declined in value, your losses can be used to offset your capital gains and reduce your overall tax burden for the year. A professional advisor will know all the tips, tricks and strategies to make sure you are keeping your tax burden as low as possible.
You Could Be Mismanaging Your Debt
Managing debt efficiently means more than just making payments on time. Your advisor could recommend allocating a larger portion of your payment toward high-interest debt, which could help save you money on interest charges in the long run. Additionally, an advisor could help you explore options for consolidating your debt or refinancing to a lower interest rate.
You Could Be Under-diversified
Without professional advice, you might put all your eggs in one basket and miss out on the benefits of diversification. Allocating your money across a number of different investments can help reduce your risk. A financial advisor could help you optimize your asset allocation to minimize risk and potentially maximize returns.
You Could Be Letting Emotion Affect Your Finances
Money is deeply emotional, and during periods of economic uncertainty, fear can drive you to keep all your money in cash. Alternatively, greed can lead you to make impulsive decisions and invest in risky ventures. A financial advisor can bring an objective, non-emotional perspective to the table and help you make a plan that aligns with your goals and risk tolerance.
You Could Fail To Adjust To Changes
As your financial situation evolves over time, it’s essential to make adjustments to your plan accordingly. Without an advisor, you might miss out on opportunities to grow your wealth or protect your assets. A financial advisor can provide ongoing guidance and help you navigate changes in your life.
You Could Be Missing Out On Valuable Financial Education
Working with a financial advisor can provide you with valuable financial education and help you make informed decisions about your money. They can help you understand complex financial concepts and terminology, and provide you with tools and resources to make smart financial choices that align with your values and goals.
- According to the GOBankingRates survey, 44% of respondents said they rely on their own research to make financial decisions.
- Only 17% of respondents said they turn to their spouse or partner for financial advice, while 12% said they rely on family members.
- More women (11%) than men (8%) said they receive guidance from a financial advisor.
While it may seem expensive to work with a financial advisor, the cost can be worth it in the long run. Professional guidance can help you save money on taxes, manage your debt efficiently, and invest in a way that minimizes risk and maximizes returns. Additionally, an advisor can help you make informed financial decisions, manage your emotions, and adjust to changes in your life.
Less than 10% of Americans are taking advice from a financial advisor, which means there are many individuals missing out on valuable financial guidance. While working with an advisor won’t be free, the cost could be minimal compared to the benefits you’ll receive in return. By working with a professional, you can learn how to manage your debt efficiently, minimize your tax burden, and invest in a way that aligns with your goals and values.