7 Ways to Build Wealth Your Financial Adviser Won’t Tell You

Financial Advisors can be helpful, but at the end of the day you control your finances. Here are some wealth building tips your advisor won't tell you!

While working with a financial adviser isn’t for everyone, hiring a professional to manage your money can pay off in more ways than one. With a financial adviser in your corner, you’ll gain access to professional expertise and insights you can’t get elsewhere. And if you hire a true professional, they’ll help boost your returns with strategies you don’t even know about.

But, are financial advisers perfect? Not by a long shot.

While financial planners are trained to improve your long-term investing returns (and they often earn more money when they do), traditional investing will always be their main focus. But, as you’re likely well aware, there’s a lot more to your financial picture than the size of your portfolio.

When it comes to common sense wealth-building strategies that have little to do with the investing world, you may be on your own. Here are seven ways to build wealth you should consider no matter what:

1. Get out of Debt & Stay Out

Financial advisers are charged with helping you maximize your investments while minimizing risk. This often means they won’t counsel you to pay down credit card debt or car loans, especially if your investing goals are on track. It’s not that your financial adviser doesn’t care; it’s just that debt management isn’t in their wheelhouse. (See how debt affects your finances with a free credit report snapshot on Credit.com.)

But, should you pay off debt regardless? According to Colorado financial planner Josh Cumrine of Total Wealth Managers, the answer is almost always yes.

“Paying off debt can be one of the best wealth building tactics that can be utilized,” says Cumrine. After all, your ability to retire won’t be based only on the size of your nest egg; it will also hinge on how much money you need to live. By paying down unsecured debts, you can lower your monthly living expenses and reach retirement that much faster.

2. Invest in Your Personal Growth

While financial advisers can serve as a great resource when it comes to getting answers to your investing questions and concerns, they aren’t career counselors. They may be unaware of the personal investments you could make that could boost your earnings or improve your job prospects. Their job is making the most of your investments, not helping you earn more.

That’s why personal growth is one area where you need to do some digging on your own.

“Investing in your own personal and professional growth will pay a lifetime of dividends that will not only enhance your life but the lives of those around you,” says Massachusetts financial adviser Eric Jansen of AspenCross Wealth Management.

Imagine you could earn a certification or advanced degree that would boost your income by 20%. While you may not receive this advice from your financial adviser, it’s important nonetheless.

3. Build an Adequate Emergency Fund

As Kansas City financial planner Clint Haynes explains, most families need an adequate emergency fund in place – even if they don’t receive this advice from their financial professional. With a fully-funded emergency fund, you can spend a lot less time stressing over money since you’ll know you are prepared for any emergency that comes your way.

“Keeping a cushion of cash is an extremely important wealth building tool – especially when unexpected events occur,” notes San Diego financial adviser Taylor Schulte. “If you lose your job or the economy takes a hit, you can tap into your cash reserves instead of swiping your credit card.”

4. Focus on Tax Efficiency

Not all financial planners will go through the trouble to review your tax returns to check for efficiency. Unfortunately, this is one of area where your financial adviser has the power to leave you worse off.

“An adviser who only manages your investments may not have the expertise or inclination to analyze your tax situation to maximize your income and value of your assets,” says Virginia financial adviser Nora L. Hartquist.

You should also make sure your financial adviser is advising you on diversifying your tax load – both today and tomorrow, says Arizona financial planner Charles C. Scott.

“If the only advice you get from your adviser is to put your investments in tax-deferred investments like (individual retirement accounts) and 401Ks because you’ll be in a lower tax bracket in retirement than you are today, you better make sure you take the time to understand what that might mean to you,” he says.

“When I entered the working world the top tax rate was 70%,” says Scott. If you take the time to look at the history of tax rates in this country, you will see that they seem to have bottomed out.

5. Pay off Your House

Financial advisers who charge a fixed percentage of your assets want your investment portfolio to be as big as possible. That way, he or she can be paid more. This means the adviser may advise you to keep more of your money invested in the stock market – and under their management.

As San Diego fee-only financial planner Jon Luskin notes, however, there are many times it can make sense to pre-pay your debt. This can include things like your house, your car notes, or a business loan.

“It depends on a myriad of things, like risk tolerance, investment allocation, and the term and interest rate of the debt,” says Luskin. Unfortunately, your financial adviser may never tell you to pay off your large debts like your house since doing so would impact their own bottom line.

6. Hire a Fee-only Financial Adviser Who Is a Fiduciary

While many financial advisers are honest individuals who take pride in their work, there will always be those who line their pockets at your expense. One way to ensure you’re hiring a financial adviser who will put your interests first is to hire a “fiduciary” – a type of investment professional who is legally required to put your interests above their own.

Fiduciaries are also paid a flat fee that ensures they never earn a commission for selling you an investment. If you want to make sure your financial adviser is always on your side and never letting commissions dictate their advice, consider replacing your current adviser with a fiduciary.

7. Learn to Be Happy With What You Have

While it’s a financial adviser’s job to ensure your investments are growing, it’s not their job to help you become happy and content. The thing is, becoming happy with what you have is one of the best ways to ensure a relaxing and happy retirement. And, isn’t that the goal?

Another piece of the puzzle is learning to be generous with what you have, notes Ohio financial adviser Don Roork of AssetDynamics Wealth Management.

“When we grip our money tightly and are close-fisted, we are letting our money control us,” says Roork. “Being generous and developing a plan for giving breaks the control and power of money in our lives.”

The greatest joy in giving is seeing the fruit of the gift, notes Roork. “Giving roots out selfishness and greed in our hearts, and conversely, it helps us make better financial decisions.

Image: Eva-Katalin

The post 7 Ways to Build Wealth Your Financial Adviser Won’t Tell You appeared first on Credit.com.

4 Times You Might Need a Financial Advisor

Geeting advice on future investments

If thinking about debt and bills and retirement accounts and emergency savings makes you want to hide under the covers all day, you’re not alone — but that doesn’t mean you actually should avoid those topics, either.

There’s a lot to plan for when it comes to finances, we’ll give you that — so how can you figure out when it might be time to throw in the towel and get a little help from a financial advisor? Consider the following scenarios.

You might need a financial advisor if … you have big life changes in the near future


You just got married or engaged. You and your spouse are hoping to buy a house in the next one to two years, and you’d like to start trying for a kid within the next year. One of you has student loans, the other doesn’t, and one of you has supplemental retirement accounts, the other doesn’t. That is a lot of financial change, all at once. In this particular case, financial planners might be able to help point you in the direction of products that should be on your radar (term or whole life insurance plans for when you do have kids, for example, or supplemental investments for both of you to pad your retirement options). Instead of taking hours to research multiple areas of your financial life to decide what’s right for you, a quick(ish) call or two with a financial planner might help set you on the right financial path a whole lot quicker (and easier).

You might need a financial advisor if … you and your significant other can’t agree on anything financially

If you’ve combined your expenses with a spouse or significant other, but can’t seem to agree on where to best invest your money, how much you should be putting in an emergency fund, which debts to pay down first or how much house or car you can afford, an impartial third party who’s familiar with money in a way that perhaps neither you or your significant are might help. Of course there’s rarely one right answer when it comes to personal finance, but having said that, it is possible to make a more educated choice, and a financial advisor might be able to help with that.

You might need a financial advisor if … you have absolutely no emergency savings, and no idea how you could start saving

There are very few situations where a person absolutely cannot afford to put anything away toward an emergency savings fund, and if you feel you fit into that category, it’s probably time to check in with a financial advisor. Emergency savings are there to help us out in times we don’t expect, and while you might hope you never actually have to touch that money, you’ll be glad to have it if you do. Don’t believe us? Just check out these stories about how emergency funds saved the day.

You might need a financial advisor if … you’re not sure how much you should be socking away toward retirement to meet your goal, or how much life insurance you should purchase

Determining those big-ticket goals (how much you’ll need to supplement your income enough to retire comfortably, or how much you’ll need to leave behind to keep your family comfortable should something happen to you) can be difficult, and if you’re not sure how to figure it out, a financial advisor can usually help. You might be surprised how much you’ll need to have in retirement accounts in order to retire comfortably, or how much life insurance you might need to purchase to cover things like a mortgage, college expenses for kids, and income replacement, but having all the information up front will help you make an informed, smart decision for both yourself and your family.

If at the end of the day you do decide to seek out some counsel from a financial advisor, don’t be afraid to ask around for recommendations from friends and family, and to have a friendly chat with a couple before deciding who you’re comfortable sharing your intimate financial details with. Be sure that the person you go with is a fee-only Certified Financial Planner (meaning they’ve completed the rigorous training and testing that allows them to gain that distinction), and ask if they are a fiduciary, meaning they’ll always disclose their fees and compensation, as well as any conflicts that might influence the products they recommend. Learn how to pick a financial planner here.

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