Should I Use a Financial Advisor and Is It Worth the Money?

Should I Use A Financial Advisor?

Should I use a financial advisor?’ is a question that many people ask themselves at some point in their life.

Financial advisors generally don’t have a very good reputation-and rightly so. Many of these “financial advisors” are only salesmen in disguise. They are tasked with getting as many clients as they can and selling the high-cost products of the company they work for.

However, not all of them are bad people. There are some really experienced financial advisors out there that can help you take better financial decisions. They make your life easier and help you reach your goals sooner. They also help you save money and give you great financial advice that helps you in the long run.

Let’s come to the big question now,

‘Should I use a financial advisor or not?

There are some situations where hiring a financial advisor is the best option. It makes sense to take the services of a financial advisor in the following situations:

When You Need a Financial Advisor

1. You Are Nearing Retirement or Are Already Retired

Near-retirees and retirees have to answer three main questions:

  • Are they financially ready to retire?
  • When and how should they file for Social Security?
  • How should they withdraw money from their retirement accounts to meet their needs and also make the money last for longer?

Answering these questions is important. They are not easy to answer on your own and can have a huge impact on your retirement lifestyle. There are various strategies and nuances attached to each of these questions. Only a professional can help you make the best decision.

You should hire a financial advisor if you are retired or nearing retirement to plan for the future

So, if you are retired or are nearing your retirement, it is best to have at least a one-time consultation with a professional financial advisor. Choose someone who is a specialist in retirement planning. It will help you make the best decisions for your future.

2. You Hate Money Management

There are some people who simply hate managing money. And there is no problem with it. You can find someone to do it for you. A financial advisor can help you out in such cases. However, you should have enough assets to be invested if you want help from a financial advisor.

When you hire a financial advisor, you can relax and let them take care of your money. Of course, you will have a say in each and every decision they take, but they will be the ones doing all the hard work.

3. You Are a High Earner

Are you a high earner but are not sure how to make the best use of all this money?

Hire a professional financial advisor if you are high earner to manage your funds.

You must prioritize and take charge of your financial life. If you are able to manage everything on your own, then you are good to go. However, it is not that easy. A financial advisor can help you out in this regard. You will be able to make better decisions.

A financial advisor will also guide you when it comes to the different tax breaks that you can take advantage of. They will assist you in making sound financial and saving strategies. They can also offer to take control of some of the management and implementation responsibilities. All this will allow you to focus your time and energy on making money and enjoying your life at the same time.

4. You Are Self-Employed

There are different financial opportunities and questions that face a self-employed person. They have more variable income, different retirement accounts, ownership, business structure considerations, and also employees to take care of.

It is best to get the services of a financial advisor who understands the issues and opportunities related to self-employment. Look for specialists in this field, and they can help you build a successful future for yourself and your business.

5. You Are a High Net-Worth Individual

Having a high net-worth also comes with its own set of financial issues. From tax planning to advanced estate and managing different types of accounts, a lot has to be taken care of. You need a specialist who can help you manage this large amount of money efficiently.

Hire a financial advisor if you have a high net worth value to invest your funds in the right manner.

There are a number of financial planning firms that are dedicated to providing services to individuals with high net worth. You can get help from them to secure your financial present and future. It will help you make better financial decisions and use your net worth in the best possible manner.

6. You Have Specific Financial Planning Needs

There are some financial situations that require specialized knowledge and skills. These situations call for a professional.

For example, you need a strong understanding of different repayment options if you are dealing with high student debt. All of this can get extremely confusing if you don’t have an expert by your side to guide you.

Similarly, if you have a child that has long-term special needs, then you will have to make a different financial plan than other couples with kids.

It is best to hire a professional financial advisor if you find yourself in a situation like this. Working with a financial expert can help you make the right decisions in each situation.

7. You Are Starting a Family

You should consider hiring a financial advisor if you plan to start a family soon or already have one.

Starting a family introduces a number of new financial challenges in your life. You might be thinking about joining finances with your partner. If you plan on having children, then you will also have to consider the additional costs that will be added to your budget.

In addition, there are other new expenses like estate planning, life insurance, college savings, etc. There are many new financial responsibilities for young families, and it can be difficult to balance them all. You need someone who can help you prioritize and navigate through these responsibilities and also help you create an enjoyable and secure present and future for your family.

So, if you are starting a family and are not sure what to do with your finances, then hiring a financial advisor is the best choice.

These were some situations where having a financial advisor by your side can really help you out. On the other hand, there are some situations when you don’t need a financial advisor. These are simple decisions that you can make yourself.

You don’t need a financial advisor in the following situations:

When You Don’t Need a Financial Advisor

Don’t hire a financial advisor if you are on a tight budget

1. You Are on a Tight Budget

Don’t hire a financial advisor if you can barely make both ends meet with your income. Financial advisors are expensive, and you will not be able to carry the relationship for long if you have a limited budget.

If you really need financial advice, you can look for an advisor and consult with them on a one-time basis for a reasonable fee. This will help you sort out your priorities. However, continuing this on an on-going basis can be difficult.

2. You Are Buried Under Consumer Debt

If you are drowning in consumer or credit card debt, then you don’t need a financial advisor. What you need is a qualified credit counselor to help you get out of this situation.

However, make sure you don’t fall for any scams. There are a lot of scammers out there who will waste your hard-earned money. Therefore, be careful about choosing the right company or individual.

3. You Have a Simple Situation

You don’t need a financial advisor if your situation is fairly simple. All you have to do is build an emergency fund, pay off your debt, invest in index funds, and take advantage of the 401(k).

You can make better financial goals and decisions for yourself if you are not in a difficult situation. Furthermore, there are hundreds of helpful resources that you can use for free. All of this will help you make good financial decisions while also not costing you any money.

4. You Are Running on Autopilot

You don’t need necessarily a financial advisor if you are already taking good care of your finances

If you have a regular habit of saving money each month, have a set portfolio, and have relatively simple investment plans, then there is no need for a financial advisor. Why hire someone to manage your finances when you are on-track already?

5. Your Income Comes from Pensions

You don’t need a financial advisor if you have a handsome amount coming in from social security and pensions. You will not be too dependent on your investment portfolio and therefore, don’t need someone to keep an eye on your finances.

6. You Only Need Tax Help

If you are only looking for tax help, then you don’t need to hire a financial advisor. A tax advisor is what you need. If you can find someone with knowledge about financial planning, then great. They will give you an overview of the bigger picture and will help keep things on track.

A financial advisor should be hired when you need a lot more than just tax help

The Final Word

Now that you know those situations where you need and don’t need a financial advisor, you will be able to take a better decision.

Taking the services of a financial advisor may be costly. However, some situations require expert opinion, and only a professional financial advisor can do that.

While choosing to work with a financial advisor or not is an entirely personal decision, you must take the points mentioned above into account. These will help you answer the question, ‘should I use a financial advisor and is it worth the money or not.’