When Should You Hire a Financial Advisor?

There can be many different reasons why you may consider hiring a financial advisor. Planning for retirement, figuring out how to invest a large windfall, or simply helping you with your existing investments are just some of these reasons.

The idea behind Certified Financial Planners is to give you professional advice with your investments and possibly to completely manage your accounts for you. It can be really tempting for anyone that doesn’t have the time or knowledge to manage their own investments. However, you really have to be careful with financial advisors because some of them will milk your account dry just to earn more commissions.

Why Hire Financial Advisors?

Financial advisors can be helpful for some people and a waste of money for others. Where you are in life, your investment knowledge, and your retirement goals can all affect whether you should hire a planner or not.

In general, if you are managing a large amount of money, I highly recommend financial advisors. This is even the case if you have a lot of investment knowledge and already do great with your portfolio. Just because you hire an advisor doesn’t mean they have to manage your account for you. Sometimes you can simply hire them to take a look at your current situation and investments to let you know if you are on the right track.

When you don’t know anything about investing but want to make sure you properly save for retirement, it can also be a good idea to involve a financial planner. Even if you hire someone to do everything for you, I still recommend that you use this site to learn more about investing and keep an eye on your account. The more you know, the less likely you are to fall victim to various financial planning scams.

Commissions & Fees

Before you choose a specific advisor, make sure you find out how they make their money. It’s common for these professionals to get paid a commission for each trade conducted through your account or possibly a percentage fee for the total amount they manage for you.

Ultimately, it’s important for you to know how they’re paid so you can consider this when you hear their advice. For example, if your financial planner gets paid commissions for each trade, and they are frequently recommending for you to switch your assets, they’re probably milking you for commissions. In a case like this, you’re not getting good advice based on your financial goals. Your advice is based on what will make the advisor the most money.

When you properly understand where your money goes, you’re much less likely to fall victim to a situation that will cause you to lose money. After all, isn’t the goal of hiring a financial advisor to help you grow your money over time? If they’re not successful at this and their commissions are the reason why, that’s a huge problem that won’t fix itself.

Advice for Big Life Moments

There are a lot of big moments in life that have a lot of financial importance. How you proceed from those moments can affect your money long-term, so it’s important to make the right decisions from the beginning. When a relative dies and leaves you an inheritance for a large amount of money, you don’t want to wing it. You’re much better off getting professional advice on how to manage that money to make it grow over time.

Planning for retirement is one situation that everyone should worry about, and advisors can help with that too. When you’re young, you want to make sure you have set yourself on the right path to reach your financial goals by retirement age. When you’re close to retiring, you may need to make some changes with your investments to get ready. Once you do retire, more changes can be necessary. Planners can help you with all of these steps to help ensure you’re on the right track to succeed.

Marriage, divorce, and kids can also be big life moments that require a helping hand. Planning to pay for college is always a big factor for anyone with children. Getting married or divorced can drastically change your financial situation and require adjustments to your long-term plan.

Advice vs Full-Time Financial Planner

Some people may not completely understand the different services that certified financial planners can offer their clients. They can completely manage your money and investment accounts for you, while you do nothing. However, if you’re not comfortable with someone else having that kind of power over your money, there are still options you can benefit from using.

An advisor can simply answer questions for you that you may have about investments. You can ask for advice about a specific investment you are considering to get their opinion. They can even do a one-time assessment of your entire portfolio and long-term plans just to make sure you’ll reach the goals that you’re aiming for.

The point is that they can adjust to your needs. Whether you need tons of help or just a small amount of guidance, they can fill your needs to help your long-term goals. For this reason, almost anyone may benefit from hiring a financial advisor, at least temporarily every 5-10 years.

Fiduciary Financial Planners

Before you actually hire any financial planner, ask them if they are “fiduciary”. If they are then they are legally required to give you advice that will benefit you and is in line with the goals that you tell them. They are not allowed to try to guide you into investments that will only benefit their income.

This one key point can give you most of the protection that you need against bad financial advisors. Still be cautious with fiduciary financial planners, but you can also rest more easily knowing they’ll go to jail if they try to make decisions that only benefit their bottom line.

Maybe you’re scared about risky investments and want to be extremely cautious with your investment portfolio. You can tell this to a fiduciary advisor and they’re legally obligated to give you advice and make trades that align with your financial goals.