When Is It Time to Hire a Financial Advisor?

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Are you staring at your bank balance, wondering what to do with your savings? First of all, if you have savings, then you are one of the few Americans that can afford this luxury. With more millennials living paycheck to paycheck, saving for a rainy day is getting harder as economic conditions continue to tighten around the globe.

So, if you have some extra earnings – what do you do with the money? Leaving it in your bank account won’t earn you any interest, and you’re doing the bank a favor while they provide you with no reward for holding your capital.

Venturing out into the world of money management by yourself can be an intimidating experience. If you have no previous experience with investing or building a financial plan, then it’s best to leverage the expertise of others that know what they are doing.

Hiring a financial planner can help you navigate the complex terrain of local and international finance. Certified financial planners have the skills and knowledge necessary to examine your income and expenses, then build a custom plan which details where you need to funnel your money each month.

A savvy financial advisor provides you with options on investment vehicles to grow your money. Having trouble with deciding on a purchase? – call your financial advisor for their input on the deal.

Hiring a financial advisor can be a boon to your financial planning. You can sleep easy at night, knowing that a professional is managing your financial affairs.

What is a Financial Advisor?

Financial advisors are professionals in personal finance. They study a degree in business and receive a qualification from an independent financial services board that allows them to dispense financial advice.

Taking financial advice from anyone is a risky affair, and if you are going to rely on someone else to handle your money, then you want to ensure that you are working with a qualified, experienced, and competent financial advisor.

Financial planners can help you make intelligent decisions about when and where to spend your money. They offer advice on investments, and they can give you an outlook for the future based on your current levels of income and expenses.

Financial Advisors

Read: What is a Financial Advisor?

When Do You Need Financial Advice?

So, when do you need to hire a financial planner? If you are only starting your career, and you have no savings or investments, then you may not benefit from the expertise of a financial advisor at this stage.

Advisors may be able to help younger people make prudent decisions with their money. They provide essential guidance on how to save and invest their earnings., However, a financial advisor charges hefty fees for their advice, and considering that new employees don’t have sizable paychecks, you may want to hold off on hiring an advisor until you have some money to your name.

If you’re in your late twenties or early thirties, then hiring a financial advisor is an excellent way to ensure you start your adult life on the right financial path. If you’re thinking about buying a home, then a financial advisor can help you calculate what kind of home you can afford on your salary.

Financial advisors work with you to create a plan for your future. Are you and your partner planning on starting a family? Financial planners can help you break down the costs of having a child and what you can expect to pay in food, clothing, school fees, and other expenses while they grow up.

There is an old saying that goes, “Those who fail to plan, plan to fail.” Don’t take chances with your financial future; hiring a professional advisor will ensure you stay on the right track to economic prosperity.

Top Reasons to Hire a Financial Advisor

Financial planners can help you avoid that “lost” feeling when trying to plan your future. If you have no idea how inflation affects the value of your money, or how to calculate your monthly budget, then a financial advisor can be a godsend that keeps you solvent and on the path to success.

If you have no idea on how to invest your money, a financial planner can take care of your investment strategy, allowing you to take a “hands-off” approach to your finances and investments.

If you are considering a big purchase like a home or a new car, financial advisors can work with your budget to check your affordability, and they can help you make adjustments to your expenses to lower your monthly budget and make room for the new purchase.

Hiring an Advisor Once-off

Financial advisors offer a range of services, and you don’t have to put them on retainer if you want to ask their advice on your financial position. Many advisors work with one-off clients for a reasonable hourly fee.

You may want to take advantage of this once-off advice if your company offers you a raise or an early retirement package. Advisors can assist you with understanding pension benefits and your 401(k.) You can hire an advisor once-off to evaluate your current financial status and provide you with a snapshot of your financial health.

One-off consultations can also help you outline a financial roadmap for your future. Advisors provide you with actionable steps you can take to improve your financial position, and the chances are that you’ll develop a relationship that lasts until you’re ready to hire their services on a full-time basis.

When Do You Need a Full-Time Advisor?

People who achieve financial success in life all understand the principle of leveraging the expertise and advice of others with more knowledge than they have on a subject. It may surprise you to learn that many entrepreneurs have no idea how to handle their money, and they have to rely on financial advisors to make their business decisions for them.

You’ll need to hire a full-time advisor as your wealth grows over the course of your career. When you start to create income streams that leave you with surplus cash flow at the end of the month, your financial advisor can give you ideas of where to place your money for optimal returns.

Many investors develop long-term relationships with their advisors and will not commit to a financial move without consulting with them first. Financial planners work with you to establish your appetite for risk. They can then formulate an investment plan based on your risk tolerance.

It’s up to you how aggressive you want to be in your investment strategy, and the final decision on what to do with your money will always reside with you, not the advisor.

A financial advisors job is to act as a futurist and plan an ideal investment strategy that helps investors earn the highest returns from their money.

Advisors also offer ongoing financial management services, which include estate planning, retirement planning, and saving for your kid’s college education. You meet with your advisor once a quarter to establish your progress toward your financial goals, and they stay on retainer; allowing you to call them if you need advice on any current personal or business financial decisions.

How about Robo Advisors?

Roboadvisors are automated financial products which will help you invest and balance your portfolios automatically using the options you select. If you don’t need a full time financial advisor, but just some help managing your stocks and shares then it might be worth taking a look at what these have to offer.

Robo AdvisorHighlightsFeesMinimum
Read Review
  • No Account Minimum
  • Low Fees
  • Professional Account Management
  • Automatic Rebalancing
$10 Per Month$0
EXO Investing ReviewExo Investing
Read Review
  • Low Fees
  • AI Driven Investments
  • Access to Hundreds of ETFs
  • No fees for Portfolio Rebalancing
  • FCA Regulated
0.75% – 0.5%£5000
Money Farm
Read Review
  • Competitive Fees
  • Great Customer Support
  • FCA Regulated
  • Easy to Use
  • Low minimum requirement
0.7% – 0.4%£1
Wealth Simple
Read Review
  • Low account minimum and no extra fees
  • Investment in fractional shares
  • Easy to Use
  • Access to financial planners
  • Tax-Loss Harvesting
0.5% – 0.4%$0
Fidelity ReviewFidelity
Read Review
  • Low Fees
  • Pathfinder System
  • Long History & Well Established
  • Will pay Penalty Fees for Moving to Them
  • Great for Funds
0.35% – 0.20%£50

Is It Worth Hiring a Financial Advisor?

Many people make the mistake of writing off the benefits of hiring a financial advisor. Most people are under the impression that they can manage their money without professional advice. In the information age, the internet has a wealth of knowledge at your fingertips, and if you need financial assistance, you can watch a YouTube video on the subject, right?

Wrong. If you’re going to try and manage your money by yourself, and you have no previous investment experience, then you may wind up involving your cash in a deal that costs your bank balance dearly.

Think about it this way, if your daughter was sick, would you seek the professional diagnosis of a doctor – or would you research articles on WebMD to see what wrong with her? Exactly. Relying on the advice of professionals is a way to leverage their expertise, so you don’t have to make an uninformed investment decision.

Vanguard, one of the world’s most successful financial services providers, does an annual report on financial advisors and what returns they make for their clients. Fund managers call the earnings from your advisor’s assets, “Alpha.” Research shows that the average alpha achieved by financial advisors in 2018, was 3-percent.

While this may not seem like much money, it’s far more than what you would receive if you left your cash in your savings account.

When do You NOT Need a Financial Advisor?

If you earn your living as a finance professional, and you enjoy investing your money and calculating an investment strategy, then you might be able to get away with not hiring a financial advisor. If you are already making stellar returns on your money, why pay additional fees to an advisor?

This close-minded approach to investing will cost you returns. The best investors in the world will tell you that they never stop learning, and they never pass up an opportunity to discuss investment strategy with someone that knows more than they do.

Your stock portfolio may be experiencing remarkable growth – but how much money are you leaving on the table? Consulting with an advisor can help you tweak your investment strategy for higher returns – even if you know what you are doing.

Research shows that almost a third of all investors are “self-directed.” They don’t take advice from professionals and enjoy managing their money without guidance from others. Further studies show that these investors might not be as savvy as they thought.

A study looked at how self-directed investors manage their 401(k.) The research shows that investors who made only one single change to their investment strategy over the term of the investment experienced a drop of 8-percent in their returns. The study shows that these investors have the habit of buying high and selling low – killing their performance.

How do you feel about hiring a financial advisor based on that fact?

The Costs of Hiring a Financial Advisor

Financial advice is not cheap, And the industry standard fee is a percentage of the assets under management by the advisor. Most advisors that dispense investment advice will charge a 2-percent management fee on your money every year.

Therefore, if you have $100,000 under management, you can expect to pay $2,000 per year in management fees. Some investment advisors charge a further 20-percent of your profits if they choose winners, but they don’t share in the costs of your loses.

How to Invest 100k

Read: Best Ways to Invest $100k

If you are looking for basic financial advice on a once-off basis, most financial advisors will draw up a financial plan and investment strategy for a fee of between $1,000 and $2,000. You can keep the advisor on retainer for a small monthly fee.

It’s vital that you select your financial planner wisely. Always look for an independent advisor that does not work for a bank or insurance company. Advisors that work for these institutions are more salespeople than they are advisors. They often allocate your funds to in-house investment vehicles – because the advisor gets paid a commission for bringing in new business.

Unfortunately, in this scenario, the advisor does not have your best interests at heart; instead, they are trying to line their pockets with your money and a friendly smile of deception.

Always ensure that your financial advisor is completely transparent with any investments they make on your behalf, and just because you are hiring them to handle your affairs, does not mean that you do not have to keep an eye on your money.

In Closing – What are the Costs of Not Hiring a Financial Advisor?

By now, you should have a clear understanding of the role of a financial advisor. While they may charge money to manage your finances, the growth of your assets and portfolio is well worth a few thousand dollars each year.

In closing, the best investors and wealthiest people in the world all use financial advisors for managing their money. If you want to be successful and keep your money growing for retirement, then model the successful and adapt to their strategy. Hire a financial advisor and create a clear path for your financial future.


Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased