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25 things you should be getting from your financial advisor

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Most millionaires and billionaires wouldn’t dream of navigating today’s world without getting professional top-notch financial advice. I don’t think you should either.

Services that were once limited to people with seven-figure or eight-figure net worth are now readily available — and affordable — even if all you have is $100,000.

Hundreds of thousands of investors — it could be millions — have advisors of one sort or another and still aren’t getting the services they should. If your “advisor” is essentially a salesperson, you’re probably missing out on some advice that could change your life for the better.

These days, you can (and should) have an advisor who is willing and able to serve as your family’s informal Chief Financial Officer. You, of course, will make the decisions (and take the consequences).

Much of your advisor’s job will involve your investment portfolio, but his or her duties will go far beyond that, as you will see in the list below.

In this column, I’m going to list a lot of things you should get from a good advisor. Not all will apply to your situation, of course. But if you don’t have this “menu of services” available to you, you should ask your advisor why not. Or consider getting a better advisor.

This list is long, and in some cases the details are short. At the end of the column, I’ll refer you to a free e-book that will give you more information.

In some items on the list, I have cited a dollar figure for what this service could potentially be worth to you. The figures are of course just very rough estimates, but those estimates were made by several large firms, including Vanguard, Morningstar and Russell Investments. In cases where I have cited “peace of mind,” I think the value is somewhere between invaluable and priceless.

Here’s the list:

1. Determine the savings rate you need in order to meet your long-term needs.

2. Determine how much risk you should take. Value: peace of mind.

3. Help couples determine how they fit together into a single plan. For example, ensure that everyone is involved in making decisions. Value: peace of mind.

4. Educating your spouse about the most important investment principles and the most important parts of your joint financial plan. Value: peace of mind.

5. Help you determine how much money you’ll need in order to retire and when you can retire. Value: peace of mind.

6. After you retire, help you figure out how much you can/should take out for living expenses, and keep updating the numbers as your circumstances evolve. Value: Potentially prevent you from running out of money; in other words, Priceless.

7. Help you determine what kinds of insurance you need, how much, and the best way to buy coverage at low cost. Value: peace of mind.

8. Help you get the right equity asset classes in your portfolio. Value: Reduce risk and add 1% or more to your returns.

9. Determine how much fixed income your portfolio should include, and the best fixed-income funds. Value: Potentially tens of thousands of dollars from avoiding losses and losing income to underperforming funds.

10. Determine the most efficient way to divide your investments between taxable and tax-deferred accounts. Value: Add as much as 0.75% to your after-tax returns.

11. Regularly rebalance your assets in order to control risk and potentially add 0.35% to your returns.

12. Select low-cost index funds to reduce your expenses. Value: Add 0.45% to 0.82% to your returns.

13. Help you choose among IRAs and 401(k) accounts and Roth or traditional versions.

14. Help you decide when, and whether, to convert IRAs from regular to Roth.

15. Help you maximize your opportunity for 40(k) matching funds. Value: potentially tens of thousands of dollars.

16. Help you select funds within a 401(k) or other employer retirement plan. Value: potentially tens of thousands of dollars.

17. Harvest tax losses when appropriate. Value: Potentially tens of thousands of dollars.

18. Help you with estate planning. Value: Potentially tens or even hundreds of thousands of dollars in the form of additional benefits to your heirs.

19. Help you decide the best time to start taking Social Security, and if you have a spouse, the best time for both of you. Value: potentially tens of thousands of dollars.

20. Prevent you from making emotional investment mistakes during inevitable market volatility, both on the upside and the downside. Value: Potentially tens of thousands of dollars.

21. Determine the proper times for your overall asset allocation to change.

22. Help you make decisions about charitable giving.

23. Help you make decisions about giving money to your children, grandchildren or others. Value: potentially priceless.

24. Help you with setting aside money for college for children, grandchildren or others. Value: potentially priceless!

25. Help your children get a smart start as investors. Value: Assuming they learn well and follow through, this is definitely priceless.

Reading that list, you of course will be skeptical of all those “potential value” estimates, noting correctly that they are far from precise. However, this article gives a detailed formula for predicting the value of a financial advisor. While it may be more math than you wish to pursue, you can comprehend the formula easily. I think it shows that the estimates above are based on more than just wishful thinking.

Today there are so many competent and well-trained advisors (some call themselves planners) that you can get all these services without paying through the nose. The services I have listed don’t include those of Certified Public Accountants and attorneys. However, your advisor should be able to work with such professionals to make sure all the parts of your plan fit together well.

For more on how to choose and get the most from a financial advisor, I suggest you read my free e-book “Get smart or get screwed: How to select the best and get the most from your financial advisor.”

Richard Buck contributed to this article.