When should you use a financial adviser – and when you can skip it


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Financial advisors can be extremely helpful. However, knowing when to call on a financial advisor can be just as beneficial for your overall situation. For example, if the thought of contacting one is as daunting as your current financial situation, it might be a good idea.

Of course, not all scenarios require a financial advisor, while some could end up going both ways. Here are some tips from failing finance professionals when it might be time to start seeking professional help and when it’s probably best to go it alone.

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When to call a financial adviser

Emotions are often factored into financial decisions, which can lead to variable results. If you’re feeling emotional about your stress, in particular, hiring a professional can help tremendously. “Using an advisor removes emotion from financial decisions,” Mark Parker, vice president of strategic growth at BEEP Wealth noted. “Studies have shown that many personal investment decisions are driven by emotions. Past experience can influence fear or ego based decisions and can often lead to unfortunate results.

Time is another important factor when it comes to money management. While many personal finances can be managed, that’s not always the case, as a Certified Financial Planner and Founder of Live, learn, plan Jay Zigmont explained. “As your financial situation becomes more complex, it can be helpful to have some help. A Certified Financial Planner can help you learn how to manage your own money or act as a second pair of eyes as well. »

Complex tax situations, such as employee stock options, are another example of when it might be time to hire a professional. “Working with a CFP professional means you can get both investment advice and tax planning. The same is true when you receive a significant inheritance or have a significant life event. True comprehensive financial planning will apply to your current financial management, investments, taxes, retirement, insurance, estate planning, etc.

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When it could go either way

If you’re wondering whether or not you really need a financial advisor, your situation may not necessarily require one. If you are able to capture all the elements of your wallet, no matter how complex, it may not even be necessary.

“If you are good at money management, investments and wealth management but want a second opinion, you can seek financial advice from a financial adviser,” said Lyle Solomon, a lawyer and a payday loan crusader, noted. If a second opinion isn’t necessarily your thing, Solomon says “you can avoid” hiring an advisor.

Another obvious consideration is to weigh the potential cost against the benefits. If hiring a counselor is something affordable and could help untangle a few knots, then it might be a good idea. If it’s something that might be difficult to budget for or if you don’t have pressing financial issues you need clarity on, it might be something you can avoid — at least for now.

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When Not to Use a Financial Advisor

Although not all circumstances require the paid expertise of a professional. It’s not necessarily cut and dry, so there are a few factors to consider. “You can avoid using a financial advisor when (a) you are confident in your ability to make your own investment decisions, (b) you don’t need help managing your portfolio, (c) you’re not interested in tax planning tactics, (d) you’re not about to retire, (e) the financial advisor doesn’t have the required expertise,” Solomon said. the type of time commitment that can go into more complex financial management.

“Ask yourself if you want to focus on money management,” Solomon said. “It’s not a part-time job. It’s not something you can do on the weekend and then forget about it. If you’re not serious or interested in money management, there’s no point in using a personal finance advisor.

Of course, if you have free time and a desire to learn, that’s always an option as well. “You should debate getting help from a CFP® professional when you might be able to learn it yourself and have the time to learn,” Zigmont said. “You may not do it perfectly, but just remember the general rule of not investing anything unless you understand it. You need to know what, how and why you are investing. Keep the considerations in mind taxes, which are constantly changing.

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