Managing your finances can be complex and intimidating, no matter your income. Determining whether or not to hire a financial advisor will depend on your budget, investments, and long-term financial plan.
If your finances are simple, you may be able to handle them on your own. But when you start to lose confidence in your ability to manage your financial life, it’s time to hire a financial advisor. In general, the more complex your finances, the more you’ll benefit.
A financial advisor will assess your current financial situation and create a plan to help you reach your goals. They can help you reduce spending, pay off debt, and save and invest for the future.
There is no specific age, career point, or income level that determines whether you need a financial advisor. Generally, you want to hire one when you start building wealth through investing, but financial advisors can be beneficial for everyone. Some clients’ finances have suddenly grown more complicated while others simply want personalized advice that helps them increase their savings or pay down debt. However, many financial advisors have a minimum investment requirement, so you’ll have to find one that fits your financial situation.
You need help planning for the future
Most people can probably admit that they need help planning for the future. Whether they’re paying off student loans, saving for retirement, building their savings, buying a house, getting married, or planning a family, it’s important to know what steps you need to take to reach your goal.
A financial advisor will create a plan that’s tailored to your situation.
But, a financial advisor costs money. If you have comfortable savings and can afford the fee, it’s a great investment. In fact, any fee will probably pay for itself in a few years as they help you make better financial decisions.
You’re going through a life transition
Sudden life transitions, such as getting a divorce, losing a spouse, inheriting money, and retiring are all situations where a financial planner can be especially helpful.
These can be challenging and confusing times, especially for people that weren’t previously involved in their household’s finances.
Even if you aren’t experiencing a major life change now, you likely will in the future. At some point, everyone needs to develop a long-term financial plan.
For most people, their biggest questions, problems, and opportunities usually arise five to 10 years before retirement. This happens as their goals change from accumulating money to protecting it.
A financial planner will work with you to assess your current financial situation to craft a strategy that will help you transition into this new stage of life.
You have to make a big financial decision
Big financial decisions such as retiring at the end of the year, paying off a mortgage early, purchasing a home with cash, or selling a business may require the help of a financial advisor.
A financial advisor can help you evaluate the decision, understand the impact on other areas of your life, and assess your alternatives.
It's often worth it to build a financial plan to help with the decision-making process. If you're not working with a professional, there's no guarantee you're asking the right questions or haven't overlooked anything.
You’re overwhelmed managing your finances on your own
When you’re young, in your 20s to 40s, you most likely won’t need help. As long as you’re contributing the maximum to a 401(k) or Roth IRA and you’re smart about spending and taxes, you can probably manage without help.
However, you may consider hiring a financial advisor if you're too overwhelmed or confused to feel confident in your financial decisions. Properly managing your investments and making the right decisions takes time, skill, and effort. If you’re faced with decision paralysis when making choices for your accounts, you're better off seeking outside advice.
Even if you do have a bit of knowledge, it can be difficult to stay on top of investing in the stock market, preparing for retirement and managing your estate, especially when you have other responsibilities.
Personal finance isn't for everyone and it doesn't have to be, but if you don’t have your own financial strategy, you should hire a financial planner. Time is money, and there's a cost to ignoring smart financial decisions.
You have enough investable assets
If you’re thinking about your financial future, working with a financial advisor is key. What you’ll need, however, is enough investable assets for a planner to take you on as a client.
When it comes to financial planners, most can’t afford to take you on until you have at least $100,000 to invest. Some only require $50,000 while others won’t take clients until they have $500,000 or even $1 million to invest. So, you’ll have to research your options to find the right people for your financial situation.
This isn’t because they don’t want to work with people with less to invest, but because planners have to charge a certain amount to make a living doing what they do.
You don't have to have millions to have a financial advisor, but you probably don't need one if you just want to invest a few thousand dollars or choose which funds for your retirement accounts.
If a financial advisor would give you greater peace of mind, it's worth it
There are many reasons why clients choose to work with a financial advisor, one of which is that it takes a lot of stress off of the individual and their family.
If you decide to seek professional help, first identify what you want to accomplish. Do you want to start investing or invest more money? Do you want to know how much you need to save to retire? Do you need to pay off debt? Do you want to leave a legacy and build generational wealth?
Tell us more by completing the form below and we can help you plan your future.