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Financial advisors are often the first people clients turn to when making decisions about their personal finances. Whether it’s managing investments or planning for retirement, questions about taxes, insurance, or estate planning will likely come up, requiring additional expertise.
Many advisors recognize the importance of comprehensive financial planning, but providing that service doesn’t mean the advisor needs to personally handle every issue that comes across their desk.
Being able to recognize one’s blind spots and knowing when to bring in another financial professional can be just as impactful. Identifying where those boundaries exist can help advisors continue to excel in their area of expertise while helping clients build financial plans that strengthen their future.
The Value of Knowing What’s Missing
Comprehensive financial guidance goes beyond understanding a client’s investment portfolio. Financial advisors should understand their clients’ goals, needs, and overall circumstances well enough to identify gaps that may impact plans, such as recognizing an insurance need, potential estate-planning issues, or tax considerations that should be explored.
This doesn’t mean the advisor needs to be the one to solve each issue. However, advisors should be able to identify what’s missing from a client’s plan or needs more review, while connecting them to additional expertise. This approach lets advisors focus on their expertise while still considering how different elements of a client’s financial plan work together.
Setting Boundaries on Tax & Legal Advice
Conversations surrounding taxes or legal matters can be some of the most important boundaries financial advisors can set. Although these issues connect to financial planning, there is a difference between incorporating them into an existing plan and providing specific tax or legal advice.
For example, a financial advisor can explain how a particular decision could impact a client’s taxes, retirement timeline, or estate plan. But when the conversation requires specific advice, calculations, or legal considerations or documents, an estate planning attorney or qualified tax professional should be included.
Bringing additional professionals onto a case doesn’t mean the advisor’s role ends. As other professionals are working on specific elements of a client’s plan, the advisor’s there to tie it all together, ensuring decisions made with an attorney, tax professional, or insurer align with the broader plan. This is especially important when a particular decision affects multiple areas of the plan.
Building Trust Through Transparency
Communicating these boundaries to clients can also help build trust. The first few meetings should help clients understand what services the advisor provides, how they’re paid, and what decisions they’ll be responsible for making.
Being transparent about when another professional needs to get involved shows that the focus remains on finding the best solution for the client, rather than trying to answer every question.
Comprehensive financial guidance doesn’t require a financial advisor to have all the answers. Identifying gaps in a client’s plan and knowing when they need additional expertise ensures important areas of their financial plan aren’t overlooked. Understanding those boundaries and building relationships with other professionals, while overseeing the client's overall plan, allows the advisor to serve as the main resource for their clients.
Kelly Gilbert is the co-founder of Eminence Financial Group. He brings more than 20 years of experience to the finance industry, particularly through small business and process improvement consulting. He is the co-author of Future Proof Investing and carries more than a decade of insurance strategies and financial investing advice experience to the industry.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.