When Should You Hire a Financial Advisor?

If you’re reading this article, it’s probably because you’re looking for ways to grow your personal financial situation and are wondering if hiring a financial advisor might be the right move for you. After all, with so many different types of professionals offering financial advice — from money managers to certified financial planners — it can feel like an overwhelming proposition. Financial advisors can help you navigate complex financial situations and understand how different actions will impact your current and future financial well-being. Whether you need help growing your wealth, saving for retirement, or planning for your future, a good advisor can prove beneficial. But what do you look for in a good advisor, and when is the best time to hire one? In this article, we’ll explore some of the pros and cons of hiring an advisor as well as some helpful tips to ensure that this is the right decision for you.

What is a financial advisor?

Financial advisors are professionals who provide advice and assistance with managing your money and investments. Financial advisors can come with different credentials — and different levels of expertise. The term “financial advisor” is actually a broad designation that encompasses a wide range of financial professionals, including Financial planners — These are the most common type of financial advisors. Financial planners assist clients with a wide range of financial issues, including retirement planning, estate planning, and investment management. These advisors may or may not have the ability to actually manage your investments. Registered investment advisors (RIAs) — These are financial advisors who have passed a rigorous certification process and are legally required to act as fiduciaries. Unlike other financial advisors, RIAs must put their client’s interests first at all times. A fiduciary is someone who acts in good faith and is responsible for managing assets on behalf of another person.

When you should hire an advisor

There are lots of reasons you might want to hire a financial advisor. Here are some common situations that might prompt you to seek out a financial advisor:

  • You’re a new investor – If you’re just getting started with investing and don’t have the experience or knowledge to properly evaluate investments, you might want to hire an advisor to help you get your portfolio off to the right start.
  • You’re experiencing a major life event – If you’re getting married, have a child, are retiring, or have another major life event that will impact your finances, you may want to bring in an advisor to help you plan for the future.
  • You’re feeling stressed about your finances – If you’re feeling anxious about your ability to save enough for retirement or to provide for your children’s future, you may want to hire an advisor to help you take a more strategic approach.
  • You want a second opinion – If you’re not happy with your financial situation or feel like you’re not making the best use of your money, you may want to consider hiring a financial advisor to see if they can help.

Where to find a financial advisor

There are three main ways to find a financial advisor: – Ask friends and family for recommendations – You might know someone who recently hired a financial advisor and be able to learn from their experience. – Use a financial advisor referral service – Many major financial institutions operate referral services that match you with financial advisors in your area. – Use a financial advisor matching service – There are also plenty of online matching services that can help you find a financial advisor who is a good fit for your situation and goals.

How much do financial advisors cost?

Cost is always a consideration when hiring any professional, but it’s important to remember that not all financial advisors charge the same rates. Factors that affect cost include the type of advisor you select (a certified financial planner or registered investment advisor) and the services they offer. Most financial advisors charge a percentage of the assets they manage for you — typically between 1% and 2%. Financial advisors who charge a percentage-based fee will likely have a minimum annual fee.

Decide Your Financial Goals and Objectives Before Hiring an Advisor

Before you hire a financial advisor, make sure you have a clear idea of your financial objectives. What are your short- and long-term goals? What do you need to achieve first, and what would be nice to have down the road? If your goals are all over the place, you’re probably a bad candidate for hiring a financial advisor. Bringing in an advisor can be helpful, but only if you’re ready to be forthcoming and honest about your financial situation.

What to Look for in a Financial Advisor

Financial advisors come with lots of different credentials and backgrounds. Which one is right for you? Here are some considerations to help you narrow down your choices:

  • Are they fiduciary? – If possible, choose a financial advisor who is a fiduciary. This means they are legally obligated to place your financial interests above their own.
  • Are they committed to your goals and objectives?
  • You want to work with someone who is committed to your interests and has a track record of delivering positive results.
  • Do they have a reasonable plan for meeting your goals?
  • You want to work with someone who has a reasonable plan for meeting your goals and achieving the results you’re looking for.

What benefits can you expect from hiring a personal financial advisor?

Hiring a financial advisor can be a great way to improve your current financial situation. Here are some ways that hiring an advisor can help:

  • They can help you prioritize your goals – A financial advisor can help you prioritize your goals and determine which ones should be your top priorities.
  • They can help you reach your goals faster – A good advisor can help save you time, energy, and money when it comes to reaching your goals and managing your finances.
  • They can help you reduce the amount of debt you owe – If you’re in debt, a financial advisor can help you develop a plan to get out from under it and toward financial freedom.

Recommended Investing Partners

  • M1 Finance is a digital investment company that provides you the benefits of a robo-advisor with the control of a traditional brokerage. M1 Finance offers low-cost, diversified portfolios for all investors, whether you’re saving for retirement or your next vacation.
  • Betterment is a low-fee robo-advisor that creates fully-automated portfolios based upon your desired allocation. It’s free to set up and they charge just 25bps in fees per year. Betterment has a team of behavioral economists on staff who help you stay on track with your long-term goals, and it’s all made simple and easy to understand so you can see what’s happening with your money at any time.

A Final Word: Be Discreet When Hiring an Advisor

If you’ve decided to hire a financial advisor and think that this is the best move for your current situation, then by all means, go ahead and hire one. But it’s important to remember that you’re sharing sensitive information with someone new, so discretion is key. You don’t want to broadcast that you’re hiring a financial advisor to your friends, family, and colleagues. Doing so could put you at risk of financial fraud and identity theft, so be discreet and selective when choosing who you hire and what information you share with them.

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