Can a Financial Advisor Really Help Me?

Many different individuals from a wide range of income levels ask themselves this question. What is the next step if you find that you are asking yourself this question? Are you able to conclude which is the best option for you? Being informed about what a financial advisor is and what they do is the first step to take when you are trying to decide if a financial advisor is the best option for you.

Financial Advisor

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Are You in Need of a Financial Advisor?

It may help you more if I ask if you would benefit more from the guidance you will receive from a financial advisor versus the cost of their services. According to this source, financial advisor fees based on assets under management range from 1.61 percent for a $50,000 client investment to 0.65 percent for a $30,000,000 client investment. Your average annual fee for a $50,000 investment would be about $805, whereas your annual fee for a $30,000,000 investment would be $195,000.

So, do you think the benefits of hiring a financial advisor outweigh their fee?  Could you possibly benefit from getting help with managing your finances? You are probably still thinking ‘maybe,’ and your final decision will most likely be based on your knowledge and comfort level with your assets, budget, investments, and financial  plan.

Financial Advisors Can Assist You, Too

Most people are weary of hiring a financial advisor because most think that they only assist wealthy individuals and their families with managing their finances and creating a solid financial plan. However, this is not the case. Many different people from a wide range of financial levels hire a financial advisor so that they get the best results from the investments they make.

Financial advisors assist many families just like yours with common life changing decisions such as:

  • Saving for college
  • Buying a home
  • Saving and planning for retirement
  • Having a baby
  • Planning a wedding
  • Divorce
  • Many more major financial goals

In order to make the best informed decision about whether to hire a financial advisor, or even what type of advisor you should hire, consider your comfort level when it pertains to making decisions about your finances and your financial plans.

Financial Advisors Help Alleviate Stress from Decision Making

A smart reason to hire a financial advisor to handle your investments is because most people get emotional when it comes to their money, especially if they have invested it. When the stock market changes, people’s stress levels seem to be on the rise. This stress can cause a reaction that may influence you to make rash decisions that may not be in your best long term financial interests. A financial advisor will serve as a middle man who can keep a ‘cool head,’ which will make them more able to make the most appropriate long-term plan for you. They use their expertise to assist you in allocating funds into a portfolio according to your personalized risk tolerance level.

Technology is here to Help

There are many different financial planning applications that can help you with your financial planning goals. These applications, such as Personal Capital and Draft, can make managing your finances easier, but should be used in addition to the assistance of a financial advisor.

Sometimes a Financial Advisor is a Must

Although technology offers many avenues when you are trying to manage your finances, such as the many different applications and websites that are available, they cannot handle the job quite like a real live financial advisor. Want to know exactly how they can help? Consider these questions:

  • How will you invest your large inheritance?
  • How do you manage tax consequences of an IRA that you inherited?
  • Can you be sure you are completing the tax information according to law?
  • When is the best time to begin withdrawing money from your 401k following retirement?

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Do You Have Confidence in Your Financial Position?

Although you may be comfortable with your financial position, you may still benefit from having a financial advisor go through your financial plans just to make sure you are on the right track. If you decide to hire an advisor for this reason, then you will only be charged an annual flat fee. During the remainder of the year you can manage your accounts on your own. However, if you are like most people, then you probably do not know the first thing about managing your money. Consider the following: Do you know how to invest your money to execute a well thought out strategy?  Have you received a lump sum of cash (perhaps from an inheritance)? If you are unsure about the best way to manage your money, then hiring a financial advisor may be the best decision for you.

For further reference, check out this Youtube video: