09 Jul Do I Really Need a Financial Advisor?
Probably just about everyone has asked themselves this question at one time or another. Maybe you’re nearing retirement and feeling a little overwhelmed with all the decisions, or perhaps you’re in your twenties, and you want to make sure that you’re setting yourself up for a well-funded financial future. No matter what season of life you’re in, seeking advice from a financial advisor can be really helpful but is not always necessary.
So how do you know if you really need a financial advisor or not?
Honestly, there are so many great resources online now that you can learn just about anything, including budgeting, investing, and retirement planning.
But You May Want to Hire a Financial Advisor if…
- You’re constantly stressed out about managing your money.
Perhaps you’ve looked online and read articles or books about finances, but you still feel like you’re not very confident about your decisions. Or you might feel like your “financial IQ” is lacking and anxiety overwhelms you whenever you think about your finances and your future. If this is the case, then a financial advisor can help you navigate the financial world so you can confidently face your future. Remember, there’s no need to allow fear or worry to overtake you when help is available.
- You’ve come into a large sum of money (like an inheritance or another windfall), and you have no experience managing large sums of money or investments.
If this is you, then congratulations! You probably feel like you don’t want to mess up this great opportunity by making some rookie mistakes, so consulting a financial planner is probably in your best interest. After all, you want to make the best decisions you can to make the money last as long as it can, right? So rather than going it alone, seek a qualified consultant.
- You want to start investing but aren’t sure where to begin.
All your friends are doing it, but you haven’t gone out on the investment limb yet. You’re a little gun-shy because you’re a newbie, and you don’t want to regret making some bad decisions. But at the same time, you don’t want to miss out on the chance to take advantage of what’s going on in the market. You’d probably feel a lot better about getting some wise advice before jumping on the investment bandwagon.
- You’re investing but don’t have the time to really manage your accounts closely.
If you’re going to invest, it’s vital that you periodically monitor your investments, evaluate them, and then make changes as needed. If that’s not something you have time to do, a financial advisor can do it for you. This can give you peace of mind knowing that an expert is keeping track of things for you.
- You are about to retire and you want to ensure that you’re on track.
So you’ve heard that there are rules and regulations about how to allocate your 401(k) plan, and you want to be sure to apply for Social Security at the right time for you, but you’re just not sure about all the ins and outs of the process. A financial planner can guide you to make the best decisions for you so that you can rest assured through the whole process.
- You don’t enjoy reading and learning about financial issues and researching your options.
Don’t feel bad if you’re not “into” learning all about the latest financial trends and wealth management strategies. Maybe you’ve tried to get “into” it, but you’re either lost or disinterested. It’s okay. That’s why there are financial advisors who get paid to manage your portfolio for you—so you don’t have to!
- Your finances are complicated.
If you’re young and single with a simple 401(k), you probably don’t need a financial planner. But if your financial situation will become more complex (or is complex) and involves a divorce, inherited stock, or retirement distribution options, then you’d be better off hiring a financial advisor to guide you along the way.
On the Other Hand, You May Not Need a Financial Advisor if…
- You plan to just invest a little cash in the market and see how it goes.
- You feel calm and confident that you have a good handle on your finances and where they’re going.
- You have plenty of time to monitor and manage your accounts and make adjustments as needed to reflect your financial goals.
- You want the freedom to do your own research and make your own financial decisions.
- You don’t want someone else “all up in your business.” (You like your privacy!)
- You enjoy learning about financial strategies and options.
- Your financial status is pretty straightforward and uncomplicated.
Choosing the Right Financial Planner for You
After all, this, if you’ve decided that you would benefit from expert advice and you really need a financial advisor, it’s important that you realize that not all financial advisors are created equally. In fact, many of these “advisors” are really just salespeople trying to sell their products to you whether it’s in your best interest or not. (Sad, but true.) This is why it’s critical to find a financial planner who is dedicated to doing what’s best for you, rather than meeting their company’s quota for the month.
How do we go about finding a good mechanic or dentist? We ask our family, friends, and colleagues who they use, right? Be sure to ask both what they like and don’t like about their profession. This is a great way to start your search for a financial expert for yourself.
You definitely want to find out how your potential advisor is paid. Do they make a commission every time they sell you a product or each time they make a transaction for you? Do they charge a fee depending on how much money they manage for you? Or is it an hourly fee? Each of these have pros and cons, of course, so do your homework. You’ll also want to ask if the professional is obligated to a fiduciary standard or not.
The SEC has a great website with useful questions and answers about what to look for when choosing someone to partner with you financially.
This newsletter was prepared by a third party company to be used on the Russell & Company and Simple Money Tips for Women websites.
This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.
