Top 7 ways a financial pro can add value to help build a secure retirement

August 02, 2023

financial professional with a client

The world of finance is constantly evolving, and technological advances have changed the way many individuals are saving, investing and planning for retirement. Digital tools and calculators, e-learning, automation options and a vast array of software applications are at the fingertips of practically every plan participant with internet access. App users can enter information related to their individual retirement goals, investment horizon, retirement age and risk tolerance. In turn, software programs serve up guidance to help align investment decisions with users’ individual values, goals and preferences.

Savers can use automation to be sure to “pay themselves first” by automating deposits to investment accounts with each paycheck. Incremental increases can be automated, too, and algorithms using past performance data, while they can’t predict the future, can help investors make informed choices.

But when it comes to helping plan participants understand their financial and investing picture — now and in the future — ‌technology isn’t a comprehensive substitute for a live, human financial professional. Here are seven significant ways a financial professional can be indispensable to portfolio management, as well as other key areas where participants’ choices can impact their financial security in retirement.

1. Creating uniquely customized investment strategies

While a checklist on an app can help users become more aware of their current financial situation, goals and values, investors are people — not data sets. Financial professionals understand that each client is a unique person with their own individual financial goals and challenges, risk tolerance, retirement plans, and time horizons. 

A trained financial professional’s skills and experience enable them to build tailored strategies that meet each investor’s needs. While one participant may need help creating and following a budget that enables them to invest, another may need help planning for retirement spending. And in between, milestone events like a home purchase, birth of a child or even a divorce can drive the need for plans to change.

2. Understanding participants’ risk tolerance and managing investment risk appropriately

Average investors may have a hard time assessing their own tolerance for risk and understanding how their risk tolerance relates to investment choices. A professional, on the other hand, is well-acquainted with suitable investments for different levels of risk tolerance. They can help participants better understand their actual retirement needs and how their financial situation may affect their reaction to market volatility. In fact, comfort with investment risk is higher among investors who work with a financial planner.1

Financial professionals help investors design portfolios that align with their risk tolerance and balance risk and reward appropriately. This can help plan participants minimize potential losses and weather volatile market conditions.

3. Helping investors save time and minimize headaches

Financial planning and investment management can be time-consuming, and the less experience and education an individual has, the more time they may spend just trying to learn even basic investing concepts. Working with a professional lightens the burden of time on the individual investor.

It also offers the client a designated source of trustworthy financial information. Rather than rely on online sources of information, an investor can be confident in the facts they get from a financial professional.

4. Providing retirement planning guidance

Retirement planning is a complex undertaking, and it’s true that every individual has their own set of variables: income, debt, savings, inherited wealth, family status, education, health status, personal goals and more.

When financial professionals help individual investors dig into the details and calculate the amount needed to achieve their retirement goals, they can bring major added value to an employer-sponsored plan. Helping participants make informed choices about when to start receiving Social Security payments can help them look forward to retirement with greater confidence — and that can pay dividends in stress reduction and individual well-being, on the job and off.

5. Minimizing tax liabilities

A financial professional who understands the complexities of tax regulations can help investors maximize the benefit of their disciplined investing strategies by minimizing tax liabilities on investments. That adds up to higher net returns, a‌ more comfortable retirement and greater confidence in participants’ ability to leave a legacy for future generations. 

6. Educating participants about opportunities and options

Financial professionals can do so much more than just manage investment portfolios. Improving plan participants’ overall financial literacy can help them understand the value of financial planning and saving for retirement. That means financial education, even on topics that seem unrelated to investing — concepts like how to manage debt or build and follow a budget, compounding and saving for educational expenses — can support better financial outcomes in retirement.

And for participants hungry for more knowledge about investing, a financial professional can be a resource to learn about how different investments and instruments work, the importance of a diversified portfolio and where to find reliable information about various investing concepts. 

7. Reviewing investments at regular intervals

Consistency and discipline are widely considered to be essential for successful portfolio management, and a financial professional who schedules regular review sessions with plan participants is working proactively to ensure portfolios remain balanced, diversified and aligned with participants’ goals.

Portfolio reviews enable participants to understand how their selected investments have performed in the context of current market trends and take timely steps to rebalance. That not only helps keep their financial plans on track, but also makes them feel cared for as people.

When a human touch matters most

One of the most important abilities of a human financial professional is their ability to connect with plan participants on an emotional level and offer compassion and empathy, particularly in times of market volatility. When markets slide, investors can make emotionally driven errors that can have lasting consequences. A compassionate professional, unlike a bot, can help temper the urges and biases that can lead investors to buy high and sell low, for example.

Perhaps the most valuable capability a professional brings to the table is an ability to see beyond the numbers and get a true sense of an individual participant’s financial and retirement big picture, including an understanding of the individual’s core values. 

An experienced professional can help participants build a portfolio that’s aligned with their values and goals, gain perspective on the ebbs and flows of income and spending over a lifetime and identify investment risks and opportunities participants might not see on their own. And that has the potential to add up to a financially secure retirement for more plan participants.

1Northwestern Mutual, Planning & Progress Study 2023.