Planning for Life’s Big Moments: The Impact of Professional Financial Planning

Do I need a financial advisor, or should I do it myself? Perhaps your circumstances have changed, and you keep asking yourself this question.

While arguments can be made for both sides, choosing to work with a financial advisor can help you map out your financial future with the goal of achieving independence and empowerment. But what does this mean and how can an advisor help you accomplish this?

Defining Financial Independence & Empowerment

“For us, it means that our clients don’t have to worry about whether they have enough money to do everything they want to in life,” said Denis Horrigan, Partner and co-founder of Connecticut Wealth Management (CTWM). “Your advisor is the one who carries the weight of your worries and works to address these concerns through the development of a comprehensive plan and investment strategy.”

Everyone has their own biases that they bring to the table. These can be rooted in your upbringing with money, a past financial struggle, or even your experience with another advisor.

Our bias is closely tied to our emotions, and financial decisions based on emotions are typically bad decisions, according to Horrigan. Sometimes these emotions lead to inaction, which can be paralyzing for some. By working with an advisor, you are helping to mitigate the impact of your bias and emotions on your personal financial situation.

“Our job as an advisor is to acknowledge these emotions and to ensure that they don’t dictate the decision-making process or how you move forward – helping you to feel empowered,” said Horrigan.

Financial Empowerment in Action

Example 1: Frequent Travelers

A lot of people love to travel and want to prioritize this in their lifestyle for the next chapter. That is why it is so critical to plan for potential expenses like this when reviewing future cash flow projections.

“Let’s say there’s a budget item in your financial plan for $20,000 a year on travel, an amount you are maybe nervous about spending in its entirety,” said Horrigan. “As your advisor, we can show you that even if you were to spend the full amount in a given year, you’re still going to be okay financially.”

Example 2: Business Owner

A personal pro forma cash flow analysis reveals that a business owner needs to sell their company for $20 million to be able to do everything they dreamed about in the future.

“They know that if they go to the negotiating table and are offered $20 million, they will be fine,” said Horrigan. “The business owner now feels empowered when they start negotiating because they know what number they need to sustain the life they want.”

And if the offer is less than that number, know that there are other options. One of which is to collaborate with your advisor on strategies that can help enhance the value of your business to reach the specific number you need.

“You only get one chance to sell your business. You deserve to feel confident in your decision and know that you will be financially secure,” said Horrigan.

The Value of a Financial Advisor

When most people think about managing their finances on their own, they are likely just talking about investing.

“A financial advisor’s role should go beyond investments and focus on the whole financial picture,” said Horrigan. This means your advisor should be reviewing other facets that impact your wealth, including tax planning, insurance policies, estate planning, charitable planning, and even business succession planning.

Ensure that the advisor you are talking to has the appropriate certifications and designations, most importantly ask if they are a Certified Financial Planner (CFP®) or a Personal Financial Specialist (PFS™). Both the CFP® and PFS™ certifications require individuals to pass an exam after completing an in-depth education program focused on the various aspects of financial planning.

Additionally, Horrigan advises asking about both compensation structure and their client-to-advisor ratio. You want to understand whether your advisor is being compensated based on the products or services they sell (some of which may not be in your best interest), as well as get a sense of how personalized their services are.

When to Contact a Financial Advisor

Many life events trigger the importance of working with a financial advisor – from changing jobs, getting married or divorced, and having kids to retirement, starting or selling a business, and health issues.

“A common theme is the opportunity and risk that becomes present,” said Horrigan. “Major life changes like these come with an added layer of emotion, which can also complicate your decision-making process.”

One decision where this becomes more complex than others is when someone is planning to sell their business. With 75% of business owners planning to exit in the next 10 years and 50% planning to transition in the next five, now more than ever, it is critical to start planning for your exit.

“Connect with an advisor before you start having conversations about selling your business – usually between three to five years out,” said Horrigan. Advanced preparation is key as it gives you time to structure your business in such a way that you get the desired outcome in the most efficient way possible.”

Wrapping Up

By partnering with a financial advisor, you are empowered by the expertise of someone who can navigate the complexities of wealth management, mitigate emotional biases in decision-making, and tailor a financial plan that aligns with your life’s aspirations. The right advisor not only helps you to feel financially secure but also helps you feel confident in the quality of the life you lead.

Interested in learning more about how Connecticut Wealth Management can help you achieve financial independence and empowerment through our services? Contact us at 860-470-0290 or contact us today.