Do I need a financial advisor?

Learning about wealth-management alternatives is an important aspect of preparing for the future. But, let’s face it, not everyone has the time to become a financial expert. Managing your finances on your own is no easy feat for most. You could hire someone to do it for you so you don’t have to constantly worry about changes in the law, the economy, or the financial market.

The question now is: Is it beneficial to hire a financial advisor? Of course, the option of an advisor is not for everyone. Seeking the knowledge of an expert would greatly benefit you if you’re looking to invest in certain assets, however, not a lot of investors do so. There are a lot of things you need to take note of when it comes to money management and planning. Here are things to consider if you are thinking of hiring a financial advisor.

Why do you need financial planning?

This is the very first question you should ask yourself. Knowing what you need help with is very important, especially for you since this is the security of your future we’re talking about. We deserve the certainty that we will push through the hardships in life, and money is the answer to most of that.

Some people may seek financial guidance as a result of a specific occurrence. Windfalls or big losses — or a major life event — are common occurrences. If you find yourself in one of the life situations, you may want to seek financial advice:

  • You are getting ready to retire and you want to ensure that you’re on the right track.
  • You’ve recently inherited money from a parent and are looking for investment guidance.
  • You recently got married, and you need help managing your finances as a couple.
  • You recently got divorced or widowed and need help moving forward financially as a single person.
  • Mom and dad are getting older and you need help to manage their overall finances.
  • You hate investing and financial planning and want professional help to ensure that you don’t mess up my future.
  • You enjoy financial planning and investing, but want a second opinion to see if you could do it better.

You also might want to ask yourself questions like if you have the basic idea of investing, enjoy learning about financial management and doing research, or have the right tools to keep track of your finances and investments. You probably don’t need a financial advisor if you want to know where to save money or invest a few thousand dollars.

Will you be able to do it yourself if you don’t work with a financial advisor?

To make proper decisions when it comes to financial planning, you need to pour a lot of your time, skill, and energy into learning the ropes. It’s going to take away time from other things you would rather do than do in your free time. For example, you’re working a typical 9 to 5 job which you would usually stare at a computer for hours a day. Finding the time and motivation to research on top of a lot of responsibilities requires a lot of dedication and determination. Of course, finance is not interesting for everyone. If you have a hard time understanding methods and strategies on your own, then getting advice from a professional may be for you.

Delaying good financial decisions or prolonging poor ones might cost you a lot of money. Hiring a financial advisor will also cost you, but if that is one of your major concerns, you could consider doing it yourself. Everyone has their own home project. With the pandemic and being stuck at home, we have a lot of time to read up on investing and financial planning might be for you.

When your plan involves Google and improvising.

They say that experience is the best teacher in life. Can’t really say the same for your money. It’s hard to make rash decisions, especially when it comes to your finances. Suddenly investing your savings into stocks or cryptocurrency might cause unintended consequences in your life. You won’t have that assurance that you will achieve the best results if you’ve never done it before.

Technically, you can learn pretty much anything on YouTube since a lot of people use this platform to educate others. If you’re asking specific questions, however, you might want to consider getting a financial advisor.

You are disorganized, and you don’t know where you stand financially.

Let’s say you do know where to invest, you have the basic knowledge that is needed. But, this leads you to invest in multiple institutions. Now, you are having a hard time knowing where you stand financially. Having a financial advisor can help you with that. They can meet with you to assess your current financial situation and goals, develop strategies for your major areas of financial concern, and a whole lot more.

You might also be a victim of lifestyle inflation, where you don’t realize that you’re already spending way too much because you can afford it now. For example, you used to drink instant coffee because it’s more affordable and saves you the time from getting in line. Then, you got promoted, and one day you decided to get a Starbucks drink suddenly becomes a daily routine for you.

If you don’t have a saving or investment strategy, you might want to discuss a cohesive investment plan with your advisor.

You are constantly worried about money and it stresses you out.

Having that peace of mind in case of an emergency, you don’t have to worry financially is a huge privilege. Sometimes, that kind of privilege requires extra help from a professional. Investors or even business owners who have a million responsibilities to attend to, often don’t have the time to monitor their investments. A retiree is also always worrying about overspending or running out of money. These situations can become a source of stress.

To help deal with these and other financial issues, hiring a financial advisor is worth it. You can think of it as an investment that can give you a quality plan for your future.

Now you’ve established that you need a financial advisor. Where do you start?

Since you know what your concerns are, it’s important to know the difference between a financial advisor, wealth manager, financial planner, investment advisor, etc. Again, a lot of research would be involved so you don’t have to wing it whenever something goes wrong. You also have to know how you will establish trust that your advisor will act in your best interest, and how they are being paid.

Make sure you hire a fee-only financial planner or investment advisor. They act as fiduciaries, which requires them to put their client’s interests first.

With that being said, you should know to ask the right questions about money. For other concerns about the risks of investing and more, you can click here

to read more on what a financial advisor can do for you.

Are there alternatives?

If you just want to know how to invest a few thousand dollars or which funds to choose in your retirement accounts, you probably don’t need a financial advisor.

The internet has everything. You can get a Robo-advisor. It is often a cheaper alternative, and some even provide access to human investment advisors or financial planners for an extra fee.

Click here to know more about Robo-advisors.

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