When Do You Need an Investment Advisor?

April 3, 2020 - 7 minutes read

When do you need an Investment Advisor?

As we wrote recently, a new investor or a “Do-it-yourself Investor“ might interpret the market’s recent and sudden drop to be reason to avoid the market entirely. However, the steady hand of an experienced Investment Advisor is able to take a calmer, macro view of things. Despite the recent volatility in the markets (due to the economic impacts of COVID-19), we still believe the stock market is the best place for growing wealth, over time.

“The market trends up over time because companies continue to grow and Earnings-per-share continue to grow. Earnings-per-share have always sloped upwards, like the market. Companies get bigger and Earnings-per-share go up and new companies start, and they go from small to medium to large.” said Ned Karren, a founding partner of Kunath, Karren, Rinne & Atkin.

“We’ve had scares before that have affected the economy, like SARS and Ebola. Some scares are short, some are longer, but the fiscal and monetary policies put in place will help businesses to grow. Our economy has always rebounded because businesses continue to grow.”

Here are some additional questions to ask yourself to determine if you need an Investment Advisor:

1. How much do you have available to invest?

Are you facing a sudden change in life? Perhaps you’ve experienced the death of your spouse, or a divorce? Maybe you received an inheritance, or sold a business, or had a successful IPO. If any of these situations apply, you may need an Investment Advisor. Generally, clients with at least $1,000,000 in investable assets benefit from Investment Advisors, though it is important to note that advisors, such as KKRA, have strategies available for those with varying investable assets.

2. How Complicated is Your Financial Situation?

If you are dealing with complex questions such as what to do with stock you have inherited, or distribution strategies during retirement, you may need an Investment Advisor. Additionally, what might make things even more complex? Are you awaiting the birth of a child? Is there a divorce pending? Is illness a factor? As your financial situation becomes more complex, you may need an Investment Advisor.

3. What are Your Needs and Expectations?

If you are nearing retirement, there are questions and answers to discuss, such as:

• What lifestyle level will you be looking to maintain? Will you be simplifying? Will you be expecting to maintain the same lifestyle you enjoy now?
• How much income will you need or want?
• Will you want a fixed amount of income every month or a variable amount that you can access on-demand?

Or, if you will still be working for the foreseeable future, an Investment Advisor can help you identify and determine your longer term investment goals. This will include a risk assessment conversation and developing a custom investing strategy for you.

In both cases, an Investment Advisor will seek input from your CPA, and then model different approaches for your investment portfolio to meet your specific wants and needs.

4. What is Your Level of Investment Sophistication?

To (effectively) manage your own investments, you need a strong understanding of both finances and the stock market.  You also need to enjoy those worlds, because successful investment portfolios require significant research and management.  So be realistic about your skills and your available time. Many people who have achieved financial success achieved it by focusing on the things they know and do best. If you have achieved your financial success in something other than investment management, the learning curve of investment management can be steep. You will most likely see better returns (and a calmer mind) when you employ an Investment Advisor. There is great value in having a trusted Investment Advisor helping you navigate complex situations, answering your questions and making needed adjustments to your portfolio.

You Need a Fee-only Registered Investment Advisor

If it’s time to hire an Investment Advisor, make sure it’s a fee-only Registered Investment Advisor (RIA). RIAs are registered with the U.S. Securities and Exchange Commission (SEC), and are bound by fiduciary responsibility. This means they are obligated to put your best interests, first. Few financial advisors have this level of you-first commitment. Because they work on a fee-only basis, RIA’s truly work for you, and will always put your best interests above their own.

Are you asking yourself, do I need an Investment Advisor? If the short answer is yes, you probably do. A Registered Investment Advisor is a professional who can assist you with your finances in a number of ways. Such experts can help with investing, financial planning, retirement planning and more.

If you are actively investing, or thinking about starting, you’ll want to visit with a Registered Investment Advisor. To learn more, click here to download our free eBook “3 Things an Investment Advisor Should Do for You”.

 

 

 

 

 

 

 

Anatoliy Cherevach is a Chartered Financial Analyst and a Portfolio Manager with Kunath Karren Rinne & Atkin, LLC, with over 19 years of portfolio management and security analysis experience. Prior to joining KKRA, he was a Portfolio Manager and Research Analyst with Cohen & Steers. Anatoliy holds an MBA in finance from Pacific Lutheran University. He is an active member of the CFA Institute and CFA Society Seattle.