Do I Need a Financial Advisor? Here’s Why It Might Be Worth It

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Although there’s no denying the value of the services an advisor can provide, you might not need to spend the money for professional advice if you have a simple portfolio and a good handle on your finances.

When Should You Consider a Financial Advisor?

Here are some scenarios where hiring an advisor can make sense:

• You’re worried about having enough saved for retirement.
• You’re getting married or divorced.
• You’re starting a family.
• You’re making a lot more money than you used to.
• You’re saving for your child’s education.
• You’re losing your job.
• You’re starting a business.

You don’t have to wait until you have a major change in your life to seek out financial assistance. Anytime you feel overwhelmed by money management decisions — whether you can’t seem to make ends meet every month or you just want to feel more secure about your future — you should consider that a sign to seek professional help.

How Paying for an Advisor Can Actually Save Money

When hiring an advisor who charges an annual fee, you can expect to pay a small percentage of your assets or a commission for services. Believe it or not, paying these fees can save you money because sound advice is valuable.

Here are three key financial areas where you would benefit from an advisor’s services.

• Tax-saving investments. When you buy and sell securities like stocks in an investment account, there are tax implications. A financial advisor can help you navigate short and long-term capital gains, potentially saving you a lot of money.
• Create an estate plan. A financial advisor can help you with estate planning. This includes wills and trusts but they can also help you find the most cost-effective way to transfer your assets.
• Planning for retirement. If you want to retire soon, an advisor can help you plan your income and retirement account withdrawals.

How To Choose a Financial Advisor

There are several types of advisors to choose from:

• Robo-advisors are fully online. They are the cheapest options but can’t provide tailored advice.
• Traditional financial advisors allow you to meet your professional in person or reach them by phone. They can provide tailored advice.

Deciding how to choose a financial advisor depends on your personal preferences. Another consideration is looking for a professional who specializes in your area of interest, whether it’s investments, retirement, budgeting, debt management or something else.

You could also consider using a certified financial planner. The difference between a financial planner and a financial advisor is that a CFP has education requirements. People generally use a planner when they want to use a long-term approach of financial advice with periodic follow-ups with their professionals.

Is It Worth Having a Financial Advisor?

Additionally, if you’re unsatisfied with the investment results you’re getting on your own, or you’re faced with confusing life-planning issues, a personal financial advisor might be just what you need. 

Beyond the financial planning support, some investors benefit from having a professional hand to hold when financial markets become uncertain.

Daria Uhlig and Cynthia Measom contributed to the reporting for this article.

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