What’s the best time to hire a financial adviser? Not necessarily in crisis time

Hikers are everywhere in Colorado and rarely worthy of notice. Yet this odd spectacle on a suburban street riveted our attention: a hiker with a backpack and other gear, leading a black llama on a leash. It was so surprising that neither of us thought to snap a photo until we were well past.

That stark contrast stunned us. City street meets mountain man with an unusual animal to boot. It felt like something from a Salvador Dali painting.

A similar contrast surprises me in the financial world: Financially successful people pay for advice while others who struggle won’t. I deliberately chose the word won’t here because it describes what I see: people who could, and probably should, but simply won’t. I guess they don’t see the value.

Value lies on a continuum. The value we perceive waxes and wanes over time. In some years, markets are docile and predictable. In others, they are volatile and uncomfortable. You might conclude that an adviser’s value is higher in those volatile years and well worth any fees charged.

Similarly, personal circumstances change, too.

Financial advisers often help people through tragic ordeals. People reach out because they need immediate help dealing with a crisis, or planning retirement, or contemplating/enduring a substantial life change. Again, adviser expertise seems especially helpful (and valuable) during stressful moments.

So, one common response is “I’ll just pay for services when I need them,” and that sounds sensible. Another variation is “I don’t have enough money to hire an adviser right now” — as if fees are somehow more tolerable with more money. Again, this feels logical.

But here’s where that misses the most important point: How we fare during extreme moments is determined by actions and behaviors during “normal” times.

A well-built portfolio withstands market rigors precisely because it was not designed in crisis mode. Overcoming stressful life circumstances rises from preparations already made. Value may seem higher in a crisis but ongoing planning and behavior truly creates value.

I understand concerns about fees, even though that worry is largely overblown. It seems to me that financial success hinges on a different perspective. Unbundle those numbers into what they might bring to your family — in other words, not what they cost, but what you gain:

▪ Situational expertise: What will you do when a crisis arises? How should you respond to a death or divorce or business setback? Advisers deal with these issues year-round.

▪ Tax knowledge and expertise: Nearly anyone can complete a tax return today. Who helps decide when to take losses or gains? How about complex withdrawal planning for IRA or 401(k) plans?

▪ Portfolio design: The forest is more important than the trees. Deliberate diversification can minimize risks, maximize returns and help withstand market or circumstantial turmoil.

▪ Continuous review process: Most amateur investors don’t systemize a review process. Success requires regular and ongoing attention.

▪ Portfolio adjustments: How do you decide to terminate a manager or sell a position? When do you take gains or buy positions in lagging sectors? Without a process, these valuable steps are missed.

▪ Professional research: You probably look up your mutual funds on the Internet. That’s a good start, but what’s the next step? Quality research extends way beyond the latest star ratings.

▪ Cash flow and income planning: Did you know there are choices on how to draw Social Security or withdraw money from retirement accounts? Who helps devise and monitor retirement income? I’m talking cash flows, taxes and extraordinary expenses.

▪ Professional access 24/7: Clients text, email or even send Facebook messages around the clock. And most advisers are glad to hear from you and answer specific questions.

▪ Professional insights: Professionals have seen everything. They know when an advertising claim is unlikely and when a valid strategy might not work. Advisers are an important screen against novice (and expensive) mistakes. This is so important.

These are pivotal issues. You will face many of them, even by default. Wouldn’t you rather have experts helping you? All the time, in good markets or bad, in crisis situations or not, and all for a reasonable cost?

It may seem stranger than a black llama, but succeeding requires good choices and the first good choice is to retain some professional help. Not when markets are in turmoil. Not when a tragedy occurs. Now. Because choices you make today are the ones that matter when you need them most.

You are not just adding costs. You are gaining crucial support services.

Dan Danford is a CERTIFIED FINANCIAL PLANNER professional and member of the Financial Planning Association of Greater Kansas City. He learned early ideas about money from his late father, Thad Danford, who charged rent on the family lawn mower while Dan cut neighborhood lawns. Danford is a practicing investment advisor at Family Investment Center and author of “Happy to be Different: Personal and Money Success Through Better Thinking” available on Amazon.