Do You Need A Financial Advisor? What To Consider Before Hiring One
There are a lot of financial decisions that you will have to make in your lifetime. However, it is not all the time that you are well equipped to handle all your financial woes. Getting some help from a professional might cross your mind, but do you really need one? Here are some things you might want to think about before seeking some professional help.
Are Your Finances Out of Shape?
You might find yourself needing to make tough decisions regarding finances and are sure where to go. This could be the time the insights of an expert financial adviser is useful. However, you should also be aware that its job description might not be what you expect it to be.
Many financial advisers are asset managers who will help you beef up your portfolio through investments. Of course, for you to maximize this service, you need to have a lot of money. Most advisers have an asset minimum of around $500,000 to $1 million. This means that it might be a little harder for younger clients who are just starting out. Another drawback to consider is that this service would typically charge around 1% of assets that are to be managed.
They Pick Clients, Too
Most advisors want to work with wealthy clients, says Dr. Rui Yao, professor of Personal Financial Planning Department at the University of Missouri. They base their charges on a number of assets that they manage. The wealthier a client is, the more they earn. Rearranging debt and budgeting accordingly is actually, not their focus.
Millennials present a decent future client base, but as of now, this subgroup does not really count as lucrative clients when it comes to generating revenue. Of course, this might not be a problem for those who are lucky enough to acquire wealthy early on in life.
You Have to Know What is Right for You
Not everybody believes in the value of financial planners. Those against say that they could be experts in finance but, at the end of the day, all they really want is to earn some money. Some would even say that these are just salesmen in disguise who are tasked to lead their clients to get expensive products from the companies they work for.
Of course, there are still plenty of good ones out there if you happen to know where you should be looking. If your financial situation is sound, a competent financial advisor should make your life a whole lot easier. This also means that you get to save a lot of money and your assets can generate more income.
Choosing the Right Time
Is there a “right time” to seek out professional help? In reality, there is no fixed asset number that pushes an investor to look for expert advice. More often, the quest for a professional is driven by a major event, such as suddenly getting a huge sum of money via a bonus or inheritance. When a regular person who typically does not have much suddenly gets his hands on a huge sum, panic ensues. This could be a major reason for mismanagement. Thus, a professional’s help is necessary.
Great for Those Nearing Retirement
When you are nearing retirement, you have to ask yourself if you really are financially ready for it, how and when you should file for social security benefits and what the best approach would be for withdrawing from all your accounts so that your needs will be met for as long as possible.
If you happen to be at this stage, you might benefit greatly from a few sessions with experts who specialize in retirement finances and planning. This is a critical decision that you will have to make and its effects will be long term, so investing in some professional advice would greatly help.
Finances are something most of us do not really know much about. When unsure about what to do with your money, you can always just search online and read up on resources. Still, nothing beats having a professional at the ready for your millions of questions. Do you know of any other factors that should be looked into before getting some help? Share with us your thoughts in the comments below.
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