Do I need a financial advisor?
What does a financial advisor do and when do I need one? Learn more about financial professionals and when to use them with these insights.
Figuring out your finances can be stressful. And unless you spend your free time studying money matters or working in a financial field, it can feel downright impossible. There are questions, big and small, to think about, from how much you can afford to invest, to how to tackle both small and large goals.
Many people decide to get help by using the services of a financial professional. What that looks like can be a number of things, and can vary depending on your age and stage of life. Before you do anything, research is key.
Some people worry that they need a certain amount of money to invest before they can get help from a professional. Fortunately, that's not true. You don't need huge assets to ask for assistance, and a financial professional can guide you with setting all sorts of goals and dreams at every stage of your life.
What does a financial advisor do?
Financial advisors are professionals that offer a range of services that can fit your budget, so don’t think that you’re too young or your checking account isn’t large enough. Financial advisors have a fiduciary responsibility to act only in your best interests as their client. If you haven’t had any experience with a financial advisor, here’s what to expect:
- They’ll begin by providing a thorough assessment of where you stand with your assets, liabilities and whether you’re meeting benchmarks compared to your peers for savings and retirement.
- They’ll review short- and long-term goals. What’s helpful about this step is that it is personalized for you.
- They can schedule periodic check-ins, such as every two years, to tweak objectives and plans based on a change in work status, debt obligations and more.
When should I get a financial advisor?
In your 20s
You're young and working full time, have a car or two and there are student loans to pay off. Here are some possible ideas to help:
- Establish good savings habits, pay off debt, set baseline goals.
- Pay off student loans. Depending on your profession, you may qualify to have part of your school loan waived.
- Consider working with a financial advisor to create an initial plan — a great option if you don’t have a lot of assets yet and simply want to know the next steps to take. Then you can discuss the next best time for follow-up.
- Before you start, ask about pricing. Financial advisors generally have different tiers of pricing. Some have minimum asset levels and will charge a fee — typically several thousand dollars — for creating and adjusting a plan, or they may charge a flat fee.
In your 30s
You're married, own a home or condo and want to provide a secure future for your family while accelerating savings to keep in line with your long-term goals. A financial advisor can help during this stage of your life.
- If you’re newly married, you could benefit from advice for managing your dual income.
- An inheritance from a family member might complicate your finances.
- Finding ways to increase your retirement savings can take a lot of research.
- Before you start, ask about fee structures. Generally, the more services you want or require, the more you’ll pay. Always read the fine print, and make sure your financial advisor follows fiduciary standards.
In your 40s
You're looking ahead to your retirement and helping your kids with higher education costs. A financial advisor can offer advice for those situations and more.
- Most retirement plans offer a set-it, forget-it option that allocates assets based on your life stage. Those generally work just fine, but most of us do not just set it and then not touch it. That might not be the best way to keep building wealth, especially as you advance in your career. Schedule regular check-ins with your planner to tweak your plan as needed.
- Balancing savings for retirement and college costs for your children can be tricky. A financial advisor can help you prioritize.
- Before you start, ask for both qualifications and references — particularly from friends and family who have had a successful experience.
Do I need a financial advisor in retirement?
Thinking about when you can retire and what post-retirement years might look like can generate concerns about whether your retirement savings are in line with your post-work plans, or if you have saved enough to leave a legacy.
- Help your financial professional understand your approach to money. If you are more conservative with saving (and potential loss), their suggestions should respond to your worries and concerns. You should also review any questions particular to your age. For example, planning for health care is one of the big unknowns in retirement, and a financial professional can outline options and suggest whether additional insurance as protection may be helpful.
- Before you start, try to get comfortable with the idea of sharing your entire financial picture with a professional. This could include things such as a credit card balance that’s too high or a debt that hasn’t been paid. Giving your professional a full picture can help them create a plan that’s prioritized to all parts of your financial status, especially as you’re fast approaching your post-work years.
Is it really worth having a financial advisor?
If your finances are simple and you have a love for doing it yourself, you may be fine on your own. Consider, however, some of the many advantages a financial advisor can provide:
- If you have multiple accounts and investments, a financial advisor can save you the time necessary to research everything that is needed to stay informed and make good decisions.
- Financial advisors have easy access to the types of information the average person doesn’t. This may include research, analytical data and modeling software.
- Even if you’re just starting out, a financial advisor can create a plan to help you get you where you want to be down the road.