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Explore How a Financial Advisor Can Help You in Boston, MA
Whether you're a twenty-something who's looking to develop a long-term investment strategy, a successful professional planning for your retirement, or a senior who wants to create a lasting legacy with your estate, the right financial advisor can help you achieve your financial goals.
Boston's top financial advisors have the specialized skills, experience, and up-to-date industry knowledge it takes to help you make the most of your financial resources.
What does a financial advisor do?
Financial advisors are professionals who work to help their clients create wealth through strategic investing, debt management, budgeting, and estate planning. They may also sell investment products such as mutual funds, stocks, bonds, and securities, as well as insurance and investment certificates. Some financial advisors provide general services, while others focus on a particular specialty, such as estate planning, retirement planning, or investment planning.
What qualifications do financial advisors typically have?
Top financial advisors have a combination of academic and professional training, as well as hands-on experience working in finances, economics, or accounting.
Most financial advisors have a minimum of a Bachelor's degree from an accredited college or university, and that degree is generally in the field of finance, business, or marketing. While an undergrad degree is considered to be the entry-level qualifications for financial advisors, it's becoming increasingly common to find a financial advisor who holds a graduate degree such as a Master's in Business Administration (MBA).
In order to work as a financial advisor, candidates need to successfully pass the General Securities Representative exam. Also referred to as the Series 7, this rigorous exam covers basic investment principles, ethics, and regulations regarding financial advice and investments.
Financial advisors are also generally required to hold a Series 63 license, better known as the Uniform Securities Agent State license. This credential allows licensees to work in multiple states, and it's mandatory in Massachusetts. The Series 63 exam covers the basic principles of state securities regulations, and in order to pass, candidates must achieve a score of 72% or greater.
Other credentials commonly held by independent financial advisors include the Certified Financial Planner, or CFP, certification. Administered by the Certified Financial Planner Board of Standards, this credential is the first non-health related certification program to earn third-party accreditation through the National Commission for Certifying Agencies (NCCA).
General financial planning needs
If you're like most people, you have a basic idea of what you should do with your money, but you're likely a bit unclear as to the specific steps you can take to reduce your tax burden, protect what you already own, and put your money to work for you and your loved ones.
In Boston, you can find a financial advisor who focuses on providing general financial advice and guidance. Also referred to as financial planners, these professionals can answer questions you might have related to finances and major life events such as paying for college, buying a home, getting married, and starting a family.
Retirement planning
Seniors aged 65 and older currently make up 16.9% of the U.S. population, and that number is projected to grow to 22% by the year 2050.
According to John Csiszar, a financial expert who writes for GOBankingrates.com, Americans will need at least $53,691 per year to live comfortably, and that's in Mississippi, the least-expensive state for retirees. Seniors who plan on retiring in Florida should plan on spending a minimum of $62,883 annually, while retiring in the Big Apple costs close to $99,000 per year. Hawaii tops the list of the most-expensive retirement destinations at $125,259 per year. Massachusetts falls toward the more costly side of the spectrum at $82,217.
Regardless of your current age, you might want to find a financial advisor who can review your current investments and set you up on a financial plan that ensures you have the money you need to enjoy a comfortable retirement.
Investment planning
Investment planning is the process of determining your investment goals, and pursuing those goals by investing money in order to reach your financial objectives.
Investment planning can involve short and long-term financial goals. It considers factors such as your risk tolerance, taxation implications, your current and projected income, and when you plan on retiring.
In the hands of an experienced financial advisor, you can develop a customized investment plan tailored to the unique needs and preferences of yourself and your family.
Trust & estate planning
Whether your family has amassed wealth through a family-owned Boston business, you've built up considerable equity in your Cape Cod vacation home, or you simply want to ensure the next generation can enjoy the same financial advantages you have had, a financial advisor can help you navigate the complexities of trust and estate planning.
Boston's top financial advisors know how to structure your assets and liabilities in a way that's as tax-efficient as possible, and that can make a tremendous difference when it comes to transferring wealth to your loved ones, your favorite charitable organization, or even a trust that you've established.
The estate planning process often involves working with multiple professionals including your lawyer and a tax planner, although if you find a financial advisor who's also a licensed accountant you may be able to forgo sourcing a tax planner.
Some of the trust and estate planning strategies that a financial advisor may employ include:
- Creating a comprehensive inventory of your assets, including real properties, investments, and cash
- Helping you determine how you'd like your assets distributed
- Assisting with financial decisions, such as whether you'd like your beneficiaries to receive their inheritance immediately or if setting up an age-restricted trust is the best option
- Reviewing the potential income taxes and probate fees that may be levied against your estate, and recommending tax-reduction strategies to minimize tax liabilities
- Shifting a portion of your assets out of taxable vehicles such as bonds and term deposits into a tax-exempt insurance policy that gains value on a tax-deferred basis and can be distributed to your beneficiaries tax-free
Questions to ask a financial advisor
As the old adage goes, there are no bad questions, and that's especially true when it comes to talking with a financial advisor. That said, it can be a good idea to come up with a list of questions before you meet with your advisor, and if possible, you might want to forward those questions in advance of your meeting so they have a chance to prepare the information you need.
Some of the most common questions to ask a financial advisor are:
- How is the financial advisor compensated?
- What kind of certifications and qualifications do they have?
- Do they have experience working with clients who have similar goals to yours?
- What's their investment philosophy?
- What is their asset allocation strategy?
- Are they a fiduciary or a non fiduciary?
- What are the total costs of their services?
- How much access will you have to them and at what cost?
- Do they have an independent custodian, and if so, who is it?
- What are the tax implications of working with them?
Frequently-Asked Questions About Hiring an Independent Financial Advisor
Do you need to be wealthy to hire a financial advisor?
No. While many top financial advisors focus their practice on working with clients who already have considerable financial assets, financial advisors aren't just for the wealthy.
In Boston, you don't need a six-figure portfolio or a big trust fund to enlist the services of an independent financial advisor. In fact, financial planning services that are fee-based rather than asset-based are often geared toward clients who don't have the income or assets needed to justify the costs that come with comprehensive portfolio management services.
For example, there's a growing trend towards financial advisors offering low-cost in-person and virtual consultations for clients who aren't yet ready to retain a full-service financial advisor. During these consultations, the independent financial advisor will review your financial situation, answer any questions you have for them, and prepare a list of actionable steps you can take towards achieving your short- and long-term financial goals.
How does a financial advisor get paid?
Financial advisor fees are based on the services they provide, which can include providing tax-planning advice, helping clients organize their estates, and placing market trades on behalf of their clients.
Advisors may work on a transaction-based fee structure, which means clients pay a commission or 'load' to make market trades or buy financial products sold by the advisor. Another common fee structure used by financial advisors is asset-based, whereby clients are charged a percentage of the value of the assets managed by their advisor.
Some Boston financial advisors also work on a flat fee or hourly basis, similar to how an accountant or lawyer bills for their services.
Who can advertise themselves as an independent financial advisor in Boston, MA?
While there's no state rules around the use of the term financial advisor, there are clear rules and regulations around the use of the title investment advisor.
In Massachusetts, anyone who works as an investment advisor with less than $100 million in assets under management (AUM), with five or more Massachusetts-based clients, or who actively solicits financial investment clients in the state must be a Registered Investment Advisor (RIA).
As with any financial services professional, clients need to do their due diligence before signing on with a financial advisor, purchasing any financial investment products, or following tax and estate planning advice.
Can a financial advisor help me make the most of my charitable donations?
Yes. Many top financial advisors are well-versed in charitable gifting. These advisors can counsel you on the best ways to support your favorite cause, whether that's by establishing a private foundation, setting up charitable bequests or charitable remainder trusts, or gifting an asset such as bonds or a piece of real estate. A financial advisor can also help you navigate the tax laws regarding charitable donations so you can give the maximum possible amount to your cause.
I'm a Boston business owner — can a financial advisor help with my succession planning?
Yes. Financial advisors work with business owners to establish comprehensive, financially sound succession plans that protect the equity you've built up in your company while reducing the tax burden for your successors. This can involve buy-sell agreements, estate freezes, and the use of life insurance to generate funds to cover any tax liabilities triggered by the transfer of ownership.
I'm just starting out in my career — is it too soon to talk with a financial advisor?
Financial advisors work with clients of all ages. In fact, the sooner you establish a relationship with a trusted financial advisor, the sooner you'll be able to make the most of your income and investments. A financial planner can help you establish financial goals at every stage in life, and working with an advisor early on gives you the time you need to build wealth, plan for your retirement, and set your family up for financial success.