Do I need a financial advisor?

What does a financial advisor do?

A financial advisor* helps you make sense of your money. Depending on who you work with, they can help you:

• Set financial goals and create a plan to reach them
• Manage investments and retirement accounts like a 401(k) or IRA
• Navigate life changes like a new job, marriage or an inheritance
• Think through tax strategies and insurance needs
• Plan for retirement and figure out if you're on track

Think of a financial advisor less like a money manager for the wealthy and more like a guide who helps you avoid costly mistakes and make the most of what you have.

*State Farm Financial Advisors do not engage in financial planning and provide investment advisory services only as investment adviser representatives of State Farm Investment Management Corp. (SFIMC), a registered investment adviser, in connection with a wrap fee program sponsored and managed by SFIMC. State Farm® and its affiliates do not provide financial planning, tax, or legal advice. Federal and state tax laws are subject to change. If financial planning, tax, or legal advice is required, please seek the services of a licensed professional.

Signs it may be time to talk to a financial advisor

You don't need a certain dollar amount in the bank to benefit from working with a financial advisor. Here are some signs it might be worth a conversation:

• You're feeling overwhelmed by financial decisions and not sure where to start
• A major life change is coming, like getting married, having a child, changing jobs or receiving an inheritance
• You have money but no plan for what to do with it
• You're anxious about retirement and unsure how much you need to save
• Your financial situation has gotten more complex, with multiple accounts, investments or tax considerations
• You and your partner disagree about handling dual income and could use a neutral third party

Should I get a financial advisor in my 20s?

For many people in their 20s, yes. And you don't need a large portfolio to make it worthwhile. In your 20s, you might be juggling student loans, a first real salary and a 401(k) you're not quite sure how to handle. A financial advisor can help you build a foundation now that pays off for decades.

Some things worth thinking through in your 20s:

• How to prioritize paying off debt vs. saving
• How much to contribute to your 401(k) and which funds to consider
• How to build an emergency fund while working toward other goals
• Whether a Traditional or Roth IRA makes sense for your situation

Many financial advisors offer one-time consultations or hourly sessions. If you're not sure you're ready for an ongoing commitment, a one-time consultation can be a low-cost way to get your questions answered.

How much do financial advisors typicall charge?

Cost is one of the biggest reasons people hesitate. Here's a breakdown of how much financial advisors typically charge:

If cost is a concern, an hourly or flat-fee arrangement is worth exploring. You get the guidance without an ongoing commitment.

What should I look for in a financial advisor?

When evaluating a financial advisor, here are a few things to consider:

• Fiduciary status: Do they act in your best interest at all times?
• Credentials: Look for and confirm designations like CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst).
• Fee structure: Is it clear and easy to understand?
• Specialization: Do they work with people in your situation?
• Communication style: Do they explain things in plain language?

Is having a financial advisor worth it?

For many people, the answer is yes. If your finances are relatively simple and you enjoy managing them yourself, you may be fine on your own for now. But if you're feeling uncertain, overwhelmed or like you might be missing something, a financial advisor can offer perspective that's hard to get on your own.

Common questions about financial advisors

What's the difference between a financial advisor and a financial planner?

The titles are often used interchangeably. Generally, a financial planner focuses on building a comprehensive long-term plan, while a financial advisor may focus on investments or specific financial tasks. Look for credentials and ask about their services before committing.

How much should I be making before I get a financial advisor?

There's no income requirement. A financial advisor can be helpful at any income level, particularly when you're navigating something new or complex. Even a one-time conversation can be worth it.

I'm in my 20s and worried about wasting money on one. What should I do?

Consider starting small. A one-time consultation or a single hourly session can give you real guidance without a large upfront cost. Going in with a specific list of questions helps you get the most out of it. If cost is the main concern, look for fee-only advisors who charge by the hour rather than a percentage of assets.

Is financial advising a scam?

Not inherently, but the industry does have bad actors. Seeking a fiduciary, checking credentials through tools like FINRA BrokerCheck and asking for references can help you find someone you can trust.

At what age should I get a financial advisor?

There's no single right age. Many people find value in connecting with a financial advisor in their 20s when building foundational habits, again in their 30s and 40s as their financial picture gets more complex and as they get closer to retirement.