According to a recent Bank of America study of wealthy Americans with more than $3 million in investable assets, the vast majority (90%) work with an advisor, and most (60%) consider their financial advisor to be their primary advisor. Approximately two-thirds of wealthy Americans (67%) work with multiple advisors. Below is a breakdown of the different types of advisors and descriptions of their roles, to help you decide who you should be on your team.
1. Financial Advisor/Financial Planner
When You Need One:
The terms financial advisor and financial planner are synonymous, but not all financial advisors are financial planners, and not all financial planners are advisors. A financial advisor who does not offer financial planning may sell an insurance, investment, or annuity product. A financial planner who isn’t an advisor may hand the plan over to you, meaning you’ll need to take charge of its implementation and keep track of the results. The most successful financial plans are developed with an advisor who creates a comprehensive plan spanning multiple decades and adapts it as your circumstances change. They will help keep you on track with cash flow management, ensuring that your income and expenses are effectively balanced to support long-term objectives.
A financial advisor is often the “quarterback” in the financial relationship, coordinating with other financial professionals, such as tax preparers, estate planning attorneys, and insurance agents. By working with a financial advisor, you can gain peace of mind, knowing that your financial health is in capable hands. But beware, not all financial advisors are the same. While most advisors are honorable, not all work in their clients’ best interests. Ask about their credentials, fee structure, and whether they are a fee-only fiduciary.
2. Investment Advisor
When You Need One:
If you have substantial investable assets, you may want to delegate portfolio management. Selecting the right investments and implementing, deciding when to buy or sell, can feel like a full-time job. An investment advisor determines the right allocation across various asset classes to optimize returns, manage risk, and align with your financial goals. Regular market analysis and rebalancing are essential to ensure the portfolio remains aligned with your risk tolerance. An investment advisor may also serve as your financial advisor.
3. Accountant/CPA
When You Need One:
Hire an accountant or CPA (Certified Public Accountant) for tax preparation and planning, especially if you have high income, a complex tax situation like business ownership, or manage income across multiple states or internationally. Their expertise enables them to work in tandem with financial advisors to devise tax-efficient strategies that maximize savings and enhance clients’ overall financial health.
4. Estate Planning Attorney
When You Need One:
Everyone needs an estate plan that allows someone else to make decisions on your behalf if you are unable to do so. Unfortunately, fewer than half (48%) of wealthy Americans have the basic estate plan (will, living will/advanced directive, and durable power of attorney). Those who work with a financial advisor are more likely to have these documents in place.
The primary role of an estate planning attorney is to draft the basic estate plan documents and trusts when you want to implement asset protection strategies or charitable giving structures, or desire to avoid probate. An estate planning attorney may also manage the estate after death, guiding the executor or personal representative through the probate process, ensuring that assets are distributed according to the deceased’s wishes outlined in the will or trust.
5. Insurance Agent
When You Need One:
You might need life and disability insurance policies if you have dependents who rely on your income for their daily needs or in cases where you want to protect a business partnership from potential financial fallout. A fiduciary financial advisor can identify those needs and help you evaluate your options outside of the sales process. Whereas insurance agents work on commission and therefore have an inherent conflict of interest to encourage you to buy a policy. Some wealthy Americans choose to buy long-term care insurance, while others decide to self-insure. Many insurance agents also help older Americans navigate through the Medicare maze to choose supplemental insurance and evaluate the adequacy of their existing coverage.
Choosing Your Advisor(s)
Whether you need one advisor or a team depends on your specific circumstances. Young professionals often do well with one comprehensive financial advisor, while those with business ownership, multiple income streams, or significant assets typically benefit from multiple advisors with specialized expertise. As you progress through life stages, your needs evolve.
If using multiple advisors, consider both the direct costs (AUM fees, hourly rates, commissions) and the value gained through tax savings, better returns, and avoided mistakes. The investment in proper financial guidance should pay for itself through better outcomes and peace of mind.
For over two decades, the fiduciary financial advisors at Hurlow Wealth Management Group have helped Midwest Millionaires create financial plans, manage portfolios, and coordinate with their clients’ team of advisors. All comprehensive clients are assigned two financial advisors, so you benefit from a wider range of knowledge and expertise. If you would like to find clarity, make decisions with confidence, and achieve comfort in retirement, CLICK HERE to schedule an introductory call today.
