Most of us get to a point in life where we think if getting a financial advisor really worth it. The simple answer to this question is it depends on your budget, long-term financial goal, and investments.
Can a financial advisor help everyone?
People always think a financial advisor is meant to help only the rich and super-rich individuals or families, but this isn’t correct. A financial advisor can really help anyone in the middle-class families range who really needs a helping hand with planning for retirement, buying a home, saving for their children’s school fees, or attending to other financial goals.
Before you hire a financial advisor or think of what type of advisor to hire, you need to do some research after you have asked yourself if it’s really worth it to hire a financial advisor and assess your comfort level with making a financial decision.
Functions of a financial advisor
Helps with making emotional decisions
The major function of a financial advisor is to remove a lot of emotional decision-making for clients. People tend to be too emotional when they are involved in a fairly risky investment strategy, like changes in the stock market.
If your investment decisions are being monitored by your financial advisor or someone else, They will ensure an emotional distance is kept by you, from your money so that bets long-term plan can be made for your money.
The allocations of funds into cabinets that suit your risk comfort level will also be done by your financial advisor.
The emergence of many financial planning apps, called Robo advisors, has been making financial planning decisions easier without the need for a financial planner or a financial advisor. Many of these websites and apps provide the same service a financial planner or a financial advisor will provide, but at a very cheaper price.
You may not need to spend a dime on the financial advisor or planner if you are confident with the level of your investment choices and money management skills, these planning tools may be your best go-to.
Big Life Changes
Although Robo advisors are very helpful, there’s no doubt about that, but they may sometimes not be as helpful as financial advisors. This is because some situations may be too complex or personal for you to depend on a “Robo” to guide you or put you in the best position.
What if a family member leave you a large sum of money or you are trying to know how to handle the tax consequences of an inherited IRA, you will definitely want to talk to a human being in this scenario, a financial advisor that truly understands the totality of your situation and can help you make better decisions.
If you have a large sum of money that you wish to invest but don’t know how to go about it, your financial advisor can help you monitor and make better decisions with the money and how to deal with tax fallout.
If your retirement is near and you don’t know when or how you can start withdrawing from your 401K or other retirement savings account, your financial advisor may greatly benefit you.
How to be comfortable with your finances
If you are confident about your financial situation but still want the help of a financial advisor, you can surely get one by paying a flat, once per year fee to a financial advisor. You can then start managing your own account thereafter.
But if you don’t understand how to implement an effective financial or investment strategy, hate dealing with finances, or have a large sum of money you don’t and you don’t know what to do with it, it may be best to hire a financial advisor to help you make those decisions.
Look at your finances before you hire a financial advisor and be sure you know what you are doing. If you are confident you can handle your daily financial needs perfectly, you probably don’t need a financial advisor. You should only try to hire one when there’s a large sum of money or a big financial life change arises.
At that point, compare and contrast a fee-based planner versus a commission-based planner.
If you don’t feel comfortable or you feel you are not making the best financial decision over money, then hiring a financial advisor may be a lifesaver that will definitely worth the investment.