Should new investors have a financial advisor?

Question

Hello,

As a soon to be first time landlord, I am curious as I look to build my rental portfolio, would it be helpful to have a finacial advisor on my team to help have a well thought out on paper overall goal. I feel as I have done a lot of research on my own but curious how a finacial advisor can help my overall wealth planning.

Thank you in advanced!

Christine Su · Answer

Thought I'd share my experience, I worked with both my accountant and a financial advisor I hired when I bought my first condo last year, which I live in and rent out the other half to someone else - My tax accountant was very helpful with figuring out the tax impact, AFTER I decided I wanted to buy a place. When I wanted a sounding board / affirmation about my real estate purchase decision in relation to my non-real-estate investments and other financial goals (ie my IRAs, other stock holdings, startup equity options, etc.), it was outside of his scope. I ended up hiring a financial advisor as well, as I was making other life changes at the same time, and I wanted to strategize for the financial impact holistically. I worked with both of them at the same time.From my experience, tax accountants and financial advisors have different strengths. Tax accountants I've worked with, work well on a transactional basis - you decide the investment strategy across different assets, and if that means $X towards ABC real estate, they'll advise how to minimize tax impact. If you wanted their advice on long term planning of broader investment strategy, they couldn't -- and understandably so, as that's not within their professional lane, so to speak. Financial advisors (the fiduciary, holistic ones at least, work well on advising across asset classes and longer term financial planning.If you're clear on your investment game plan, a solid CPA, like other commentors have mentioned, works well. In case you find yourself asking him/her questions beyond the real estate transaction and they can't answer, you can consider getting a financial advisor - there is a small but growing subset of fiduciary, holistic advisors who don't push products or push to manage all your money, and even do one-time advice or project-based financial planning.

Good luck with your CPA / FA search!- Christine

Dennis Wasilewski · Answer

I'd incorporate a solid accountant/CPA.  Lots of financial planners are incentivized to put you into different types of investments.

Greg O'Brien · Answer

@Christine Su very good analysis, thanks for sharing.  Unfortunately, that is true for a lot of CPAs. It pains me when I hear they work on a transactional basis vs proactive. I think there are a lot of great, forward thinking, tax planning CPA firms out there now.  A tell tale sign if I were looking is to ask about the number of clients they serve.  If it is a small firm services several hundreds or thousands of clients, you may get stuck in a trasactional relationship vs looking for a boutique planning based firm.

Adam Rasmussen · Answer

I'm really biased but I have to agree with @Dennis Wasilewski. A good CPA should be able to advise on certain moves you are making and can educate you on the tax benefits of being a landlord.

Bill Hampton · Answer

Javier Perea

Yes, it is beneficial to work with a Financial advisor for overall wealth planning. A good Financial advisor will incorporate your real estate investments into a comprehensive financial plan.

You should look for a Fee-only Financial advisor that works for a flat fee or hourly rate. A Fee-only advisor won't try to sell you any stocks, bonds or mutual funds. If you can't find one local you should consider working with one remotely.

Good luck and let me know if you have any questions.

Should new investors have a financial advisor?

Most Popular Reply