Whether an advisor is proactively making suggestions or simply validating the moves you've made on your own initiative, their impartial, objective, and informed analysis can help give you the confidence you may need to stay the course through the ups and downs of the market.
Some high income investors may particularly benefit from working with an advisor. For example an advisor could help you navigate complex estate planning or company stock plan concerns, and potentially seize opportunities to fulfill your investing, retirement, and legacy goals.
These are complicated matters, and though you may feel that you can navigate them on your own, there's always the potential for mistakes. "There are so many decisions to make, and it can often be difficult to see the full context or understand the ramifications of a particular decision," says Gina Gillespie, a financial consultant with Fidelity Investments. "My job as an advisor is to help a client make good financial decisions across the board—from saving to spending to figuring out the most efficient way to handle taxes."
Establishing a relationship with an advisor often comes with a cost, but in the long run, it may be worth it. Industry studies estimate that professional financial advice can add up to 5.1% to portfolio returns over the long term, depending on the time period and how returns are calculated.1
So what does an advisor actually bring to the table? Here are 3 things Gillespie says you can expect when you work with a professional financial advisor like her.
1. Listening to your concerns
A good advisor will take the time to get to know you and to understand your financial situation. By gaining a clear understanding of your values, your tolerance for risk, and your vision for yourself and your legacy, they can provide guidance on how to refine your master plan for retirement. "Planning for your life in retirement is very personal. It's important to find someone you're comfortable sharing your dreams and aspirations with," says Gillespie.
An advisor may also focus your attention on concerns you may not have considered—from the effect that rising health care costs and inflation could have on your ability to lead the lifestyle you want, to important considerations about where you will be living in retirement. Through active listening, Gillespie says she is able to assess where a client may have overlooked something and bring it to their attention so it can be addressed before it becomes an issue. "The last thing anyone wants in retirement is a surprise," she says.
2. Identifying opportunities
An effective plan for retirement has many components—sometimes, it can feel like a full-time job trying to stay on top of everything you need to know in order to identify important opportunities when they are available to you. "When I work with clients, they're mostly concerned about how they can efficiently save, how they can efficiently grow their assets, and how do they make sure those assets go to the right place, ultimately," says Gillespie.
Whether you're trying to keep more of what you earn when investing, concerned about how your assets will pass to the next generation, or just want to protect you and your family from the unexpected, it can be a big help to have an advisor who understands your needs and knows the lay of the land when it comes to insurance, tax laws, estate planning, and investment management—or who can point you to someone who has specialized knowledge regarding your particular need.
"We have great specialists, but it's hard for a client to know when and how they should engage them," says Gillespie, noting that clients often have very specific questions about trust planning, real estate, or inheritances. "I'm on the front line and can help them identify what it is they want to do and connect them to the right specialist when it's appropriate."
3. Navigating uncertainty
Perhaps the most critical role an advisor plays is that of a reassuring coach during times of stress. When things get tough, it can be helpful to have someone to remind you that you have a plan in place and that you're more likely to enjoy a positive, long-term outcome by staying invested.
"I proactively keep in touch with people during times of great anxiety or periods of market volatility because those are the times when people are most likely to make a bad decision," says Gillespie. "These are vulnerable moments and without someone to talk to, even the most thoughtful, planful person can feel compelled to act in a way that might be counterproductive."
Reactive decision-making can be detrimental to the long-term growth of your portfolio. According to a long-running study, imprudent investor behavior, such as selling out of the market during downturns (and missing out on the subsequent recovery) can have a big impact. In 2024, for example, the average equity fund investor underperformed the S&P 500® index by 8.48%, largely due to poor decision-making.2
It's never too late—or too early—to engage
While earlier is better, it's also never too late to consult with an advisor. Whether you're a few decades away from retirement, on the cusp of it, or already living in it, an advisor can provide a valuable sounding board for your thoughts, concerns, and aspirations. That said, Gillespie does recommend that if you're thinking about retirement, you may want to consult with an advisor at least 5 years before your desired retirement date. "That way," she says, "if there are changes that need to be made, there may still be enough time to make adjustments that aren't too disruptive."