9 September · Season 1 · Episode 1 37 Min · By Thomas Do I need a financial advisor? One of the most common questions asked. Thomas Davies a Wealth Advisor addresses this very question.

Well, welcome to the 1715 Treasure Coast first podcast on financial wellness. My name is Thomas Davies and I thank you for joining me today. And we're going to talk about a couple of things, but the main focus today is going to be why you need a financial advisor. It's something that comes up all the time and a question that I get asked.

And the real answer to that is you don't. If you don't, if you're going to put in the hard work, the dedication and the time that it takes to become your own financial advisor, you certainly can do that. But if you're out there in the workforce working another job, maybe you're retired and you'd much rather be playing golf or at the beach or driving across country, whatever it may be you're doing in retirement. The fact of the matter is you don't need a financial advisor if you're going to do the work yourself.

You know, as I've gotten older in age, I've learned that there's certain things that I don't want to do. And you know, picking investments for somebody may be one of those things that they don't want to do. And the financial planning aspects of that, they may not want to do either. And that's what I'm here for, to help people with their investments, their financial planning, their estate planning, to make tax conscious decisions in their investments.

And you know, all these things take time and hard work. And you know, when you are in the middle of a career, at the end of a career, or maybe you're in retirement, you know, time is our most valuable commodity. You just don't get it back. So you know, for some people, it's going to make sense to hire a financial advisor, to do the work for them, to do the research and to put in the time that it takes, you know, to make a well executed financial plan or investment plan, whatever it is in your life that you're going to need.

And so with that, you know, the few things that have come across my desk, and things that I've thought about, you know, why someone should hire a financial advisor. And the first and foremost is time. You know, the time that it takes to research investments, to know what's out there, what's available. You know, maybe you have a background in finance, maybe you don't.

But the fact of the matter is, you have to know what you know, and more, I think, more importantly, know what you don't know. And you know, by hiring a financial advisor, it's someone who works and lives in that space, and they are in the know. And they're going to make your life easier when it comes to finance. You know, maybe it's a tax problem that you're having.

Maybe you just don't know how to invest. What investment should I put in? I mean, it's certainly been a tough year this year. Everything's down.

You know, tech, bonds, equities, it's really been probably one of the most challenging years in my 25 plus years. And you know, as someone who doesn't have a background in this environment, you know, it can be very frustrating. When markets are going up, up, up, it's pretty easy to make money. You know, you put in an index fund, I hear that all the time.

Well, if you don't know what you do, you know, put it in an index fund. Well, how are those index funds this year? They're down 10, 15, or more percent. You know, in some cases, they were down over 25%.

And that probably can't feel good to someone who doesn't have the background in finance or understand the markets. They've seen a quarter of their earnings or a quarter of their savings go away. So you know, the first aspect is going to be your time. How much is your time worth?

And you know, you just don't get it back. So that is why I would, probably one of the top reasons I would hire somebody to do something. I'll relevate it to mowing my grass. Takes me three hours.

I don't have three hours on the weekend to give up, but I can pay somebody and they're done in 45 minutes. And I can take those three hours and spend it with my family. That's time that I won't get back. And I think it's well worth to pay someone to do it.

Now, when it comes to finance, you know, the time and due diligence that it takes to monitor a portfolio, an investment portfolio, or multiple investment portfolios, sometimes you're going to have IRAs. You're going to have taxable accounts, non-taxable accounts, maybe you have annuities. All these things need monitoring. I think of a story that someone told me once of, you know, don't you think that what you do is like watching the grass grow once you get it all set up?

I'm like, well, in some essence, yeah. But also that if you don't take care of your lawn, I'm going to use this lawn as a reference, you know, you're going to get weeds and it's going to look like crap if you don't take care of it. And the same thing is going to happen in your investment portfolios. If you don't take care of it, you don't monitor it, it's going to look like crap.

And once again, that all takes time. You know, probably the second thing that I would talk about is experience. I think experience counts for everything. You know, maybe you have plenty of experience in investments and you just want to bounce those ideas off someone knowledgeable in that arena.

I can tell you, I work with multiple individuals that are very knowledgeable and sometimes they just want a sounding board to bounce those ideas off of and, you know, as a financial advisor, we have tools that the general public don't have access to because they're not industry professionals. So we're going to have access to things that, you know, we're going to have information that's for, you know, professionals, for institutional investors that, you know, just the mainstream generally is not going to have access to unless they're an institutional investor or an advisor themselves. So knowledge is certainly power, right? Ben Franklin.

And so, you know, probably the third reason that I would look at besides time and knowledge is experience. You know, how much experience do you have? You know, maybe you have no experience. You know, I work with a lot of people that don't have experience in financial markets and, you know, in investing and it's scary because it's their life savings.

And, you know, you just can't stick your head in the sand and think everything's going to be okay. Certainly like this year, you know, it's been incredible. You know, if you just put your money under the rug, you're losing, you know, 9% to inflation. You know, it's just amazing that, you know, you just can't turn a blind eye.

So I think experience counts a huge, huge role in what we do. And, you know, being able to draw on experiences for myself, I have over 25 years experience in the financial services industry. So I have seen a lot of the ups and downs in the markets over the last 25 years. And, you know, there's always going to be surprises.

The funny thing is it's different this time when it's generally never different. The details may be different, but the way the markets react and the way that our economy reacts to certain events certainly isn't different. So, you know, experience is huge and plays a very key role in why you would hire a financial advisor. You know, so we've got time, you know, we've got experience, you know, in the field.

And, you know, having those just few key things are huge when you're looking to hire somebody. You know, and whether it be myself or someone else, you know, a lot of times people come to us with just simple financial planning. Financial planning in a nutshell is very simple, and I'll give you that answer. You know, first, you have to set a budget.

You either have a deficit or a surplus in your budget, and you have to figure that out. You have to write it down. Once you figure that out and you actually have a surplus where you're not spending more than you make, okay, you're going to put an emergency fund together, whether it be the car brakes, washing machine, dishwasher, refrigerator, whatever it may be, you're going to have an emergency fund. And once that emergency fund is established, now, you say, well, how much is that?

And some people make three months' salary, six months' salary. I generally like to say at least six months. You know, God forbid something happens to you, you're going to have at least six months of savings to live on, you know. And then the next thing we'll start looking at is insurances.

You know, can you afford insurance? You know, whether it be long-term care, whether it be, you know, some type of out-of-work, out-of-pocket expenses, health insurance is certainly first and foremost. You know, so those are things that we look at also. And then lastly, once we've got a couple of those things out of the way, then we start looking at investments and what it is that you're saving for other than just a rainy day.

You know, is it going to be college expenses? Is it going to be maybe a vacation? Is it retirement? And then what are you going to do in retirement?

And that's a whole other podcast on retirement. But, you know, just putting money away to put money away, you really want to start thinking why it is that you're putting money away. So, you know, those are just some of the things in financial planning and a really high level looking down. But those are the basics.

You have a budget. You have an emergency fund, right? And then, you know, then you're able to start putting money away. But the first foremost is that budget.

You know, you've got to make sure, you know, and it doesn't have to be down to the dollar. You know, it can be, you know, within a few, you know, even $100, you know, or $1,000. Depends, you know, how much money you make. But you got to have something to look at and say, okay, do I have a surplus or a deficit?

And, you know, once you establish that budget and you know how much money you have coming in, it makes a big difference. And, you know, there's some people that have a great problem, go, well, I know I'm making, you know, X amount of money and I don't have to do a budget. Well, even though you know that you're making more than you spend, you know, you still should have a budget. You still should have a roundabout figure of, you know, what that surplus is coming in.

And then when you get to the investment portion of it, that's really where, you know, a financial advisor can help you. You know, I watched a show the other night and every advisor talked about throwing money into an index fund. The old Warren Buffett saying, right, if you don't know what you're doing, just put it in an index fund. Well, I don't agree with that advice.

I think that, you know, there's multiple index funds that you're going to put it in. And some of you may be going, well, what is that? You know, what is an index fund? Well, I, you know, ask you to Google that or just look it up, an index fund.

But you're going to want to have something, you know, not just in the market, but maybe in the bond market, maybe in emerging markets, maybe in the international markets. And those can all be bought in index funds. But if you're new and you don't know what an index fund is, you know, you're just going to look at, you know, buying the S&P 500. And, you know, this particular show, you know, they're giving advice to an athlete who doesn't know what they're doing.

And he says, well, we're just going to buy an index fund. Well, if I went to that athlete and said, hey, would you buy every single NFL team in the league? You're going to say, no, some of them are terrible. Well, that's why it's about making educated decisions and educated choices.

So, you know, those are a couple of reasons, you know, working with a financial advisor, they have the tools, I think most importantly, that can set up for success. And once again, all this work can be done on your own, but it depends how much time, that number one factor, how much time are you willing to put into it? And maybe you don't want to, and you just want someone else to manage your investments. And I think it's a great idea.

You know, money managers have teams, they have rooms full of teams, which I utilize, you know, that have 30, 40, 50 people that travel the country, that travel the world, and they know what's going on. They have their fingers on the pulse of the economy. They're having annual discussions, whether they be monthly, quarterly, and they're taking, you know, those client funds and they're investing them the best that they see fit, you know. And so for myself and for my clients, you know, we lean on those money managers and their talent that they pay a lot of money to these people to make those investment decisions.

I've always kid, you know, who am I to say that Home Depot is better than Lowe's one day to the next. I'm not going to spend my time sitting there looking at their K1s. I'm going to buy it in a fund, and I'm going to let the fund managers decide whether I should have 2%, 3%, 5%, or 10% of a company. That's what they do.

Those are the decisions that they make. And yeah, you have to pay them inside the fund, and as of late, it's been a race to zero. It's just been, you know, a race to the bottom. So the fees are really low for these fund managers.

I suspect that these fees are probably going to start raising. They're going to start raising their fees, that, you know, things all around the world are getting more expensive. So I think although it's been a race to the bottom in their fees, I think that that may change. It's my opinion.

I think it may change. But, you know, these are some of the small things, once again, that, you know, you're going to want to hire a financial advisor for, you know, and I think that time being number one, experience, you know, and knowledge. That's really, you know, those three basics of why you would go out and hire a financial advisor. It just makes all the sense in the world to do something if you're not familiar with, you know, I know that I can open the cabinet under my sink and look at the pipes, but when it comes to connecting them and making everything work, I'm going to hire a plumber.

I'm not going to do it. And I'm a fairly mechanical person. You know, the same with anything that I look at that I just don't understand. I'm going to hire a professional because I don't have the knowledge.

I use the lawn reference. I can cut my grass. I can certainly go weed-eat the lawn and do that, but it's going to be time. Like I said, it takes three hours for me to do this, and that's three hours on the weekends when I'm not working that, you know, I can spend with my family.

And when you start adding that up over, you know, 52 weeks a year, that's a lot of time. And it's a minimal cost to pay someone to get that time back in my life. So, well, this is podcast number one. I'm going to put this on the YouTube, so don't forget to like and subscribe.

If you like what you hear, like I said, it's number one, so hopefully you cut me a little slack. And, you know, we'll look forward to doing one at least once a week here at 1715 Treasure Coast Financial Network, we'll call it. I think that's an appropriate name. And for those of you that are wondering what 1715 is, here on the Treasure Coast in Stewart, Florida, it is the age of the pirates and age of the fleet that had laid treasure in the ships that sunk off the coast.

So I thought it was kind of neat with the 1715 Treasure Coast financial wellness. So thanks again. I hope you all have a great weekend. And I threw in the y'all because we're in the south, and we will certainly talk to you soon and look forward to next week.

And we'll see you then. Take care.