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Should You Hire a Financial Advisor?

Published May 1, 2020

5 minute read

By Heather Fishel

Is your money reaching its full potential? Are you saving enough for retirement? Are you earning enough from your investments and assets? Should you move your money? These are important financial questions. But few people know the answers to them. In fact, many people don’t even know if their money is invested, saved, or spent in the right ways.

That’s where a financial advisor can help. Financial advisors are knowledgeable and experienced in all things finance, from savings to investments to smart money moves. And hiring a financial advisor could help you make the right decisions about your money and your future.

But is hiring a financial advisor truly worthwhile? How do you know when it’s time to hire a financial expert?

The Benefits of a Financial Advisor

Working with a financial advisor can offer many benefits. In addition to general financial advice and recommendations, a financial advisor can take a close look at your money and how it’s working for you. And that valuable advice can help you in a number of different ways.

The following are a few of the biggest benefits of hiring a financial advisor.

Get Expert Advice for Your Future

Whether you’re a young adult or a senior getting ready to retire, it’s tough to plan for the future. You have big decisions to make and an uncertain future to prepare for, and your finances hang in balance. A financial advisor can help you make smart decisions both for your current situation and your future goals.

For example, a financial advisor can help you create a plan to pay off your student loans and build an emergency savings fund. An advisor could help you begin contributing to a retirement account or another savings goal like buying a house. And they can recommend the best accounts and places to stash your money to meet these milestones.

Financial Advisors Offer Impartial, Third-Party Opinions

You might think that having a base of financial knowledge makes you just as good as a professional financial advisor. But there’s one big difference: a financial advisor offers an impartial, outside perspective on your money. And no matter how much knowledge you have, your personal perspective will sway your financial decisions.

A financial advisor can help you make sound, smart decisions without any bias. An advisor will recommend the best moves for your money with no ulterior motive. And they can help you avoid making an ill informed or irrational decision.

Advisors Can Create a Plan, With Action Steps

Another way financial advisors can offer valuable help is with an action plan. Financial advisors won’t simply offer recommendations for your money and leave you to make the decision. When you hire an advisor, they will give you a detailed plan that outlines exactly what’s recommended for your money. Whether you’re looking for investment advice, savings recommendations, or overall financial planning, an advisor can give you a clear path to achieve your goals.

And that plan typically includes action steps. For example, a financial advisor will lay out asset allocation based on your risk tolerance and available funds, recommending new investments you can make. Or, your financial advisor will lay out specific accounts or funds that will offer a good return on your money and detail how and when you should make these moves. All you have to do is take the actions recommended to you.

Consider Getting a Financial Advisor In These Situations

Financial advisors are commonly used in two ways: for one-time advice or as a long-term service. Some people choose to visit a financial advisor only when they need advice for a specific situation or financial goal. Others rely on a financial advisor to help them with regular recommendations and input.

But in some situations, hiring a financial advisor can be particularly valuable. In the following situations, a financial advisor can be especially helpful – and it’s a good idea to consider hiring one if you find yourself in any of these stages.

You’re About to Retire

If you’re ready to retire, you’re preparing to start a whole new chapter of your life. But one of the biggest challenges of retirement is the loss of your primary income. You’ll have to make the switch from a regular paycheck to a fixed income. And a financial advisor can help you navigate this adjustment.

A financial advisor can help those nearing retirement handle complex questions. From withdrawing your retirement savings to understanding taxes and fees, a financial advisor can devise a strategy that suits you.

You’re Getting Married

Like retirement, marriage is a significant milestone. But it can also be financially complex. From combining money to sharing expenses, marriage can introduce a number of unique financial questions that you might not know the answer to.

A financial advisor can help you and your spouse navigate financial decisions like saving for a home, combining assets and money, and planning for children. They can also help you determine how to prioritize your goals and create a sound financial future.

You’re Self-Employed

If you work for yourself, either as a business owner or a freelancer, your finances can be particularly tricky. There are different financial rules, different taxes, and different opportunities available for the self-employed. Fortunately, a financial advisor can help you understand what moves will be in your best interest.

A financial advisor can help anyone who’s self-employed figure out both business and personal finances. They can answer questions about your business structure, employee finances, and income. They can also map out moves you should make to prepare for different situations that might not affect others.

You Have Questions About a Specific Financial Situation

If you encounter a complex financial question or are facing a confusing financial situation, a financial advisor can be a huge help. From managing large amounts of student debt to caring for aging parents or special-needs children to owning multiple properties, there are plenty of unique situations that could benefit from a financial advisor’s recommendations.

Ultimately, if you have questions about what to do with your money, it’s a good idea to consider a financial advisor. These experienced professionals know the answers to many financial questions, and they’re well-versed in navigating complex situations.

Financial Advisors Can Be Costly

One of the biggest concerns people have about financial advisors is the cost. Hiring a financial expert to give you guidance can come with a high cost – and financial advisors can cost anywhere from a few hundred dollars to a few thousand dollars.

The cost of a financial advisor varies significantly. Some will charge a flat rate of approximately $1,000 to $2,000 for a comprehensive, detailed financial plan. Others, particularly those who work with investments, will charge a percentage based on the amount of money they’re working with. For example, if you’re looking to invest $200,000 an advisor might charge a 1 percent fee annually, or $2,000. Other financial advisors are paid by banks and investment companies, and their costs can be organized differently.

An easy way to think about the cost of a financial advisor is in terms of the money you’re working with. If you don’t have a lot of money and aren’t planning on using a financial advisor’s recommendations to generate earnings, it may not be worth the cost. Even a small fee can decrease your potential gains. However, if you will be earning money either via a higher interest rate or improved investment returns, a financial advisor can be well worth the cost. 

If you’re considering hiring a financial advisor, it’s a smart idea to do your research first. You want a financial advisor who’s going to work in your best interests and at an affordable price. Ask friends and family for recommendations. You can also search online for reputable advisors in your area. Make sure to read reviews, check advisors’ experience and education, and vet each potential candidate before making a decision.

Couple Discussing Chart with Financial Advisor

Atstock Productions / Shutterstock

Heather Fishel


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