You Don’t Need a Financial Advisor… Until You Do (Here’s When)

You’ve done everything right. You saved consistently. You built a portfolio. You figured it out on your own. So why would you ever need a financial advisor now. 

That question makes sense. And for many people, the answer really is that you don’t. At least not yet. But there is a point where the game changes. What got you here is not what carries you through retirement.

In this episode, James Conole walks through where that shift actually happens. It is not about picking better investments or trying to beat the market. It is about coordinating everything that starts to matter more once work income stops. How your portfolio generates income. How taxes evolve over time. How to avoid the kind of one time mistake that can quietly undo decades of good decisions.

For some, that is manageable alone. For others, the complexity adds up. Not always in obvious ways. Sometimes the biggest cost is not a bad investment. It is money left unspent, opportunities missed, or decisions delayed because there is no clear plan to follow.

There is also the human side. Markets fall. Headlines create fear. Even the most disciplined investors can feel different when they are no longer earning a paycheck and are relying on their portfolio to support everything.

The real question is not whether advisors are good or bad. It is whether your plan, your time, and your peace of mind would be better with one. Because at a certain point, the value is not just in the numbers. It is in making sure everything you built actually supports the life you want to live.

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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.

The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements

Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.

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Transcript

Why Should You Work With An Advisor?

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You have saved diligently your whole life. You've built up your retirement accounts. You've done well. And now you're asking yourself, why would I work with an advisor at this point? I've gotten to where I am by myself. What on earth can an advisor help me do on a go-forward basis? This is the absolute right question to be asking because here's the reality. Not everybody needs an advisor. But, and this is a big but, everybody absolutely needs to know what's at stake going forward so that if you're going to do things on your own on a go-forward basis, you know what to look out for. Because what got you here today is not what will get you there tomorrow. That's why in today's video, I'm going to help you break this down. As a certified financial planner practitioner, I've had thousands of conversations helping people to navigate that transition from their working years to their retirement years. And from those conversations, I've seen exactly what works. And I've also seen the areas you don't need an advisor to do the right thing on a go-forward basis. So yes, I am coming at this through the lens of being a financial advisor. But that lens has shown me very clearly where an advisor can help, maybe in unexpected ways that you didn't even know before, versus where you'd probably be fine on your own to go at this even without a financial advisor. This came up recently in a conversation with a prospect. They had about an$8 million net worth, 5 million of which was in investment accounts, 401ks, brokerage accounts, et cetera. And their question was we've never worked with an advisor before. And frankly, we've done quite well and we're quite proud of what we've done by ourselves. So, what is it that now would make an advisor valuable to us on a go forward basis when we've done all this without one? So today's video is not just about those specific people I was talking to. It's about you. And it's about your decision of whether you're gonna work with an advisor on a go-forward basis or not. So before we jump in, and I'll go through a list of the things you need to be doing, whether with an advisor or without one, in order to make your retirement journey a success. But before doing that, let's address two misconceptions I hear all the time to make sure that we're framing this conversation properly. Here's the first one. A lot of people ask, why do I need an advisor? I'm not gonna run out of money. I've built this nest egg of a portfolio. I don't have any concerns of running out of money over the course of my lifetime. Good. Many of our clients don't have that concern of running out of money over the course of their lifetime. But just because you're gonna be okay doesn't mean you're doing the best you possibly can to optimize everything that you worked for. In other words, working with a financial advisor isn't just to fix a broken situation. Working with a financial advisor is sometimes to take a wonderful situation that you have and make it even better. Now I'm gonna show you specific ways in which that can happen, but I just want to address that up front that you don't work with a financial advisor just because you're in a broken situation. Number two is this people say, well, you can't outperform the market. So why would you work with the financial advisor? Here's the thing: I agree with you. If you're trying to actively pick stocks to outperform the market, very high chances that you're gonna underperform over time. It is very, very difficult to beat an index, say the SP 500. The misconception people have is they think if I'm gonna work with an advisor, the reason I'm doing so is they can pick better stocks than the SP 500. Here's the reality: there's a very low chance of that happening. And if that's what you think you're hiring an advisor for, don't. They're not gonna be able to deliver that in a consistent way. That is not why you should hire an advisor. So I'm addressing those two misconceptions up front because so many of the people I've talked to think those two things if they're already in a good spot without an advisor and an advisor can't beat the S P 500, they think those are the questions they should be asking in order to work with an advisor. But those aren't the things that an advisor should be doing for you. So now what I want to focus on is what are the things that you should do by yourself without an advisor, or you should absolutely be working with an advisor to help with, because these are the things that actually create value that are gonna make your retirement a more rich experience. The first thing that you want to understand is your portfolio strategy. What got you here will not get you there. In other words, what you did to accumulate your money, that may have worked tremendously well. And even if it did, I'm going to tell you that's not the best thing you should do to start spending down your money, to have that money work for you throughout your retirement. The reasons for this are quite simple. If you're 45 and the market drops 40%, that's a wonderful buying opportunity. If you're 65 and the market drops 40% while you're also pulling out 4-5% per year, that's a potentially devastating experience for your retirement. So during your working years, all you really care about is what's the average return of the different investments you own in your 401k in your brokerage accounts. In retirement, average return doesn't matter. Your sequence of return matters, the way in which you pull money out of your portfolio. So it's much more about engineering the right type of portfolio, not to get an average return, but to give you flexibility and to give you the optionality of where you can pull funds from, whether the market's up, down, or sideways without having to be concerned about sequence of return risk. So as you're approaching retirement, do you have a portfolio strategy that's designed to support that? That portfolio strategy needs to be created the correct, the right tailored mix of conservative stable investments to protect you against market downturns, with the right mix of growth assets to keep up with inflation and grow your purchasing power over time. That's not an arbitrary 60-40 portfolio. It's a specifically tailored portfolio that's unique to your goals and more specifically, unique to your cash flows. In retirement, your income and your expenses are gonna change. Maybe you retire and Social Security hasn't kicked in yet, or maybe you retire and your pension hasn't kicked in yet, or maybe you're retired and you have a mortgage for the first few years of retirement, but that goes away down the road. What you can start to see here in this example is the amount you need to take from your portfolio is going to ebb and flow over time. It's not as simple as saying you're just gonna take 4% per year and take that forever. Your amount that comes from your portfolio needs to be reflected in how you invest your portfolio. So your retirement portfolio needs to make that strategic shift from what got you here in your accumulation years to what's gonna deliver the income you need to maintain your lifestyle while also protecting against sequence of return risk in retirement. So that's the first thing that you need to do is make sure your portfolio strategy is still dialed in. The second area where an advisor might be able to help is in the tax strategy component of things. I will say this is the single biggest area where a good advisor can add quantifiable value to a client in their retirement years. The reason I say that is because too often people who DIY their retirement strategy, they simply pull money out of their portfolio in a proportionate way, or they don't understand the impact of RMDs in the future. And so they feel good in the first two years because they're keeping their tax bracket low. But as soon as RMDs kick in, those RMDs are stacked on top of Social Security, on top of their other dividends and income, on top of all that, and it creates this tax situation that they can no longer avoid. So they're pushed into a much higher tax bracket in their future years, which drains their portfolio when they could have had a strategy to mitigate their taxes over the course of their retirement. So, what does tax strategy and retirement look like? Well, it looks like Roth conversions. It looks like asset location. So not just what investments do you own, but what accounts are those investments held in? It looks like tax bracket management. So do you understand your federal ordinary income tax bracket? Do you know what your federal capital gains tax bracket is? Do you know your state income tax bracket? Do you know what IRMA surcharge level you're at? Do you understand provisional income and what amount of your social security is going to be taxed? And not only do you know that today, but do you have a sense of how it's going to change over the course of your retirement years? Because it's not enough to have a snapshot of where you are today. In order to implement a strategy, you need to compare today to where you're expected to be in the future so you understand when to realize certain types of gains and when to implement certain tax strategies. If you are doing that and you enjoy doing that, great, you might not need an advisor. But if you're not doing that, or you don't really enjoy doing that, that is an area where a good advisor can quite literally save hundreds of thousands of dollars, if not more, in taxes over the course of your retirement. Now, none of this is a guarantee because I don't know your situation. All I'm speaking on is based upon the situations and clients we've worked with and being able to quantify tax savings that are going to help them tremendously over the course of that retirement. The third thing that you need to understand when evaluating do I need an advisor or do I do this on my own, is you need to understand the hidden costs. Yes, you see the cost of the advisory fee. That advisory fee can be$10,000,$30,000,$50,000, depending on the size of your portfolio. That is very apparent, very real, very in your face. But do not discount the fees and the costs that you don't see. Because I'll tell you this there is no option that doesn't come with any cost. It's not fee or no fee, it's this cost or that cost. The challenge is the advisor cost is very apparent and you see it. The cost of not doing that is potentially invisible. Let's quickly go over a few examples where that shows up. The cost of the performance you don't get over time. Now I'm not talking about performance of an advisor should be able to beat the SP 500 in your large cap growth fund. What I'm talking about is a properly designed portfolio that's managing against the risks that retirement inherently has while also optimizing your growth potential over time. What's the cost of underperforming that? You'll never know, you'll never see it. It's just going to show up as less growth over time. What's the cost of the money you don't spend? Now, this is one of the ironic parts about working with a good advisor, is a good advisor is going to help you and encourage you to spend more money. Too often our clients come to us. They spent their whole lives working and grinding and saving and they have this portfolio, but fear prevents them from fully being able to enjoy it, fully being able to spend it. And more times than not, that means they're going to end up with way more money in their portfolio at the end of their lifetimes than they ever had at any point in their life before that. Is that really your goal? Is your goal really to die with three times as much money in your portfolio at the end of retirement than you had going into retirement? You might think that sounds outlandish, but that's a very normal reality for many people I speak with. And it's not because they have intentions of leaving some grand inheritance for their children or their family, it's because of fear. That fear prevents them from spending. And what seems like maybe not the worst case scenario, I'm going to translate that for you differently. What that actually means is you're going to wake up one day with a tremendous amount of regret of what could you have done with that money? What trips could you have taken with your family before your spouse passed away, before your friends passed away? What things could you have done before your health started to deteriorate? What are the causes that you could have given money to when they most needed it? So the cost of not spending money sounds like something that's maybe not too bad. Don't be too concerned about it. But the reality is that's going to show up as regret. And if there's one thing you can do over the course of your life, over the course of your retirement, is do the things today that will minimize your regret 20 years from now. So the money you don't spend can be a tremendous cost of not doing things the right way in your retirement. Another cost is what's the cost of your time? What's the cost of your energy? Maybe you are really, really good at this, but do you really want to retire and have another full-time job? Do you really want to retire and know that everything is on you? This thing that you've built up over the course of your lifetime, your ability to retire, your ability to support your family, to do the things you want to do, all of that is on you. So even if you're good at it, do you want to retire just to go back to work again? To make sure that you're overseeing this, to make sure that you're managing this? If so, great. If you enjoy this, great. I've met a lot of people that are both very good at this and really enjoy doing this. Now, assuming you have a contingency plan in place, if you pass away and your spouse takes over, keep doing it. But for those of you that don't want your time to be spent evaluating your portfolio or your cash flow, your tax strategies, that's where a good advisor could come into play. Now I just mentioned this, but the next thing that you need to consider is surviving spouse insurance. Maybe you're really good at this. And I don't mean insurance in the literal sense of going and paying for a policy, but what would happen if you were to pass away today? Does your spouse know where to log into your brokerage accounts? Does your spouse know when to collect Social Security and where to pull the next amount of their income from? Does your spouse have the ability to file taxes and to be able to incorporate your Roth conversion strategy accurately into that? If not, you either need to make sure they are on board with that, that you've trained them or that you've shown them what needs to happen, or that there's a contingency plan in place, that there's a partner that could help your spouse if that were to be the case, so that you passing away isn't just an emotional hardship, but it also becomes an extreme financial burden. This is where a good advisor can be that continuity plan that you can trust to look out for your spouse if you were to pass away first. The next area where an advisor can add value is being those behavioral guardrails. We all like to think we're perfectly rational with everything we do, but I can tell you, maybe the single biggest thing that makes otherwise rational people make incredibly emotional decisions is their money. Because your money isn't just a portfolio. Your money is your livelihood. Your money represents future security, your money represents your ability to actually live the life you want to live in retirement. So given that, it's completely normal that we would be incredibly emotional about this. Now, when I say emotional, I don't mean that in a negative sense. I mean this in a you have a deeply vested interest in this working out well. And with that comes a profound fear of things going wrong. So how does that show up? It shows up in one of two ways. One is spending. I already mentioned that. It's going to be very difficult for those of you who have built a great portfolio to just flip the switch and start spending that portfolio down in retirement. The cost of not spending your portfolio is your portfolio keeps growing. Seems like a good thing on paper, but in reality, that leads to a tremendous amount of regret because you missed out on all that life could have offered had you had the permission to spend. And many times that permission comes from having a strategy that an advisor helps to walk you through. The second piece is when markets go crazy. Now nobody thinks, yourself included, that they're going to be the ones to make an emotional driven decision in the midst of a market downturn. You may even be saying, I've been investing for 40 years. I've never once been bothered. I never once made a change when markets went down. That is true, but it's going to be a very different story when you retire. And now all of a sudden, a market downturn isn't a buying opportunity that you're putting money into. A market downturn is something that you still have to pull money out of. That's going to become a very challenging thing. Now you combine that with the headlines going on, and I've seen very rational people make very emotional decisions with their portfolio. Even just in the last few years, everything from the tariffs being announced on Liberation Day to 2022, to the massive sell-off in stocks, especially with tech stocks, to COVID, to Trump being elected, to Biden being elected. You name it, whatever your political preferences, whatever your worldview is, there have been plenty of reasons as an investor to be completely terrified about remaining invested over just the last few years. Here's the thing that's five, six years of sample size. You extend that to 80, 90, 100 years. There's always something that feels like this time is different. This time things are not going to be able to recover. Now, when you're in the midst of trying to preserve this thing that you've built, you're in the midst of trying to protect yourself and your spouse and your family to ensure your portfolio lasts. You combine that with markets dropping rapidly, 20, 30, 40%, it is not uncommon at all for people to make one single mistake in the midst of a 20, 30 year retirement. And the cost of that mistake significantly outweighs the cumulative cost of an advisor over the course of that full 20 to 30 year retirement. So those behavioral aspects, we all have blind spots. And by the very definition of a blind spot, we don't see it. You have blind spots. I have blind spots. Sometimes working with an advisor is a great chance for someone else to illuminate those blind spots in our lives so we know what to look out for. We don't make the decisions that end up costing us far more than the cost of an advisor ever would. So as I go back to what I mentioned before, there is a very obvious cost of working with an advisor, especially if you've never worked with one before. The sticker shock of what that can be can be tremendous. But don't let that lull you into thinking that staying the course is without cost. There are so many hidden costs that aren't as apparent. They're not going to be itemized on a statement for you, but they absolutely exist. And if you're going to be your own advisor throughout retirement, you need to be mindful of these and you need to be very aware that one single mistake there could significantly outweigh the cost of working with an advisor. So as I listed everything I just went through, if you hear that and you're confident you can do that. If you enjoy doing that, and if, assuming you're married, your spouse could continue doing that even if you passed away first, why work with an advisor? Why spend the money to do that? But if that's not the case, then my final question to you is this How much money would you pay to have less stress, less anxiety, more peace of mind, and in fact, probably a better financial outcome than if you didn't spend that money? That is how I would frame the value of a good financial advisor. None of this is a guarantee. There's nothing here that you can set in stone, you put an input in and get an output out the other side. But when you're working with a good financial advisor, that should be what you're getting. You're getting clarity, you're getting simplicity, you're getting peace of mind. And oh, by the way, a good financial advisor should be able to add quantifiable value that exceeds the cost of what you're paying them. So as we close, recognize that yes, there is a cost of working with an advisor, but there's also a cost of not working with one. If you're listening to this and you're saying I could use help with an advisor, at least want to have a conversation with an advisor to see if they could help with my specific situation. This is exactly what we do at Root Financial. You can either click the link in the description below, go to rootfinancial.com, or even scan this QR code right here. If you want to reach out and have a free call, we'll show you what we do and see if it might be a good fit. Because there's too much at stake for you to simply do what's worked up until this point, assuming it's gonna work going forward.