Do You Need a Financial Advisor?


So far, up until this point in your life, you’ve managed your own money. You’ve established bank accounts, signed up for credit cards, procured loans, saved up for retirement, and invested a little bit in the stock market. But you want to do more with your money, and you’re wondering if you should hire a financial advisor to help you.  

Getting a financial advisor is a personal decision, and it depends upon your financial goals and objectives. You may not need one right now, and it could be a waste of money. Or perhaps you don’t need a financial advisor who is a real-live person, but you could use some help from a robo-advisor.  

Let’s first take a look at what a financial advisor does to determine if you should begin seeking one out.  

What Is a Financial Advisor?  

A financial advisor is a professional who gives you educated financial advice and can assist you with a number of financial objectives. You’re going to have various financial goals based on where you are in life and what you want to accomplish.  

Some goals may include: 

  • Being able to save up enough money so you have $50,000 a year to live off of after you turn 70 
  • Having the financial means to pay your children’s full college tuition 
  • Putting 10 percent of your income into a stable but lucrative mutual fund 
  • Jumping into the stock market with $10,000 in savings in order to double or triple it over time 
  • Being able to purchase a home in your neighborhood 
  • Having a few hundred thousand dollars to leave to your kids and grandkids once you’ve passed away 
  • Getting out of debt from credit cards and student loans 

Some ways that a financial advisor may show you how to reach your goals include:  

  • Finding you a stockbroker to work with 
  • Investing in blue chip stocks 
  • Creating a money market bank account 
  • Getting you started with estate planning 
  • Helping you with a Roth IRA 
  • Putting you on a snowball debt plan 
  • Showing you how much you need to save and what kind of loans you can get for purchasing a home 

When you meet with a financial advisor, you will tell him your goals, and he will give you a plan of action you need to take in order to reach them. He will explain what services he provides, what he specializes in, what certifications he has, and other types of clients he has worked with in addition to the successes he’s had. He may also be able to refer you to other professionals he works with who might be able to help you, including insurance brokers, accountants, stockbrokers, mortgage officers, and more.  

In this meeting, you will also fill out a questionnaire for the financial advisor. You will list:  

  • How much money you have in your bank accounts 
  • Any debts or loans you have 
  • Your mortgage and tax expenses 
  • Your everyday spending 
  • How much you pay for insurance 
  • Your current income  
  • Your future income from social security or your pension 
  • Any additional income you have from real estate, gifts, etc. 

The idea is to get the full picture, so the financial advisor will be able to tell you what steps to take to get you in financial shape.  

When You Need a Financial Advisor 

Depending on where you are in your life, you may or may not need a financial advisor. As a good rule of thumb, you should be able to afford the financial advisor. When you meet with a financial advisor and come up with a plan, you may be looking at a bill $1,000 to $3,000 bill, at the very least. Some professionals have a minimum amount of money they will work with so you might not even reach their requirements to become a client. Others will charge you a fee based on how much money you are investing.  

There are certain times in your life when it makes sense to invest in a financial advisor. For example, if you just received a large amount of money as a gift or from a deceased relative, it’s wise to hire someone who will help you to figure out how to invest it. You may not have ever handled that much money before, and you need someone experienced to help you. 

Hiring a financial advisor is also a good idea if you’re making a big life decision, such as getting married, making a large investment, getting serious about your retirement plan, or creating an estate plan.  

If you just graduated from college or you’re facing financial difficulty, now may not be the time to get started with a financial advisor. However, you might want to consider a robo-advisor instead. 

A robo-advisor, also known as an automated portfolio management service, is a lower-costing option for financial planning. Just like with a real financial advisor, you will fill out a questionnaire and show your complete financial picture. You will determine your goals during this step as well. The robo-advisor’s computer algorithm will make investment suggestions based off your data. It may also show you some financial planning resources that will help.  

How to Find a Financial Advisor  

Whether you want to use a human financial advisor or a robo-advisor, there are effective ways you can find one. 

The first thing you should do is ask your trusted family members, friends, and coworkers who they use. You can also check out The National Association of Personal Financial Advisors and see who comes up when you search your state. You can also perform research by reading the Garrett Planning Network, whose advisors are recommended by The New York Times, CNBC, and USA Today.  

If you want to find out more about a financial advisor, simply type his or her name into Google and look at the Google Reviews, Yelp pages, and other review websites. You will be able to see what other clients have said this particular financial advisor. Remember to be cautious. If they have too many perfect reviews, you want to make sure they are from real people and not fake. That’s always a red flag. On your Google search, see if any lawsuits or investigations come up as well. You don’t want to accidentally work with a financial advisor who has been convicted of a crime.  

Additionally, you’ll want to ensure that whomever you hire is a certified financial planner. That means he or she will be licensed and regulated, and will follow a code of ethics.  

In terms of robo-advisors, some well-known ones include:  

  • Schwab Intelligent Advisory has a $25,000 account minimum and charges a 0.28 percent fee. With this service, you get access to a real-life financial advisor for questions or concerns, there is a wide ETF selection, and they offer automatic rebalancing. The cons include a steep cash allocation and tax-loss harvesting only being available on $50,000+. 
  • Wealthfront, on the other hand, has a $5,000 account minimum and charges a 0.25 percent fee. The pros include a low ETF expense ratio, automatic rebalancing, direct indexing on accounts that are over $100,000, and daily tax-loss harvesting. But there are no discounts if you have a large balance, and there are no fractional shares.   
  • Betterment, which has an account minimum of $0 and 0.25 percent fees, allows users to have access to goal-based tools, and fractional shares that limit uninvested cash. The only con is that there is no direct indexing. 

For some of these robo-advisors, you can visit NerdWallet and receive special discounts, as well as additional information on how to sign up. 


Getting Started with a Financial Advisor 

Whether you decide to begin looking for a financial advisor right away, or you are planning to hire one in the future, it’s critical that research and take healthy financial steps right now. 

Remember to: 

  • Create and follow a budget 
  • Save up money for an emergency fund and retirement 
  • Make sure your money gains interest 
  • Use your credit card rarely, or only if you can pay off the full balance each month 
  • Pay all your bills on time 

There are a number of free resources online you can use in the meantime while you prepare to meet with a financial advisor. Just remember that any investment you make in your financial present and future is going to be a good one.

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