There are some jobs in life that you can DIY and others that you leave to the pros. While you can handle simple tasks like paying your bills, what about doing your taxes, forming a business, or making a will?
Even when you’re sure you need help with your finances, it’s not always obvious where to look for it. There are all kinds of financial pros out there, with dozens of titles.
If you’re feeling out of your depth financially, your first step should be to learn what types of financial professionals are out there. Once you know that, you can make a sound decision about which ones you need on your financial team.
Types of Financial Advisors & Professionals
Here are some of the professionals you can hire to keep all the bases in your financial life covered.
1. Accountant
The main reason most people hire an accountant is to help them prepare and file their tax returns. An accountant can help you:
- Fill out your tax return correctly to avoid an audit
- Find deductions you might be missing out on, such as a home office or childcare deduction
- File an extension on your taxes
- Invest or donate to charities in ways that will lower your taxes later
If you own a business or are starting a side business, an accountant can do other jobs for you as well. You can use one to help you set up and manage your books, keeping track of all your income and expenses. Your accountant can also prepare financial statements or reports.
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Cost
According to the Bureau of Labor Statistics, the average accountant makes around $38 per hour for their services. If you want to hire an accountant for your business, the price you pay will depend on the size of the firm you’re dealing with and the accountant’s level of experience.
Who Needs One
If your tax situation is simple, you can probably file your taxes without assistance. The simplest tax form, the 1040EZ, is only one page long and shouldn’t take more than an hour to fill out.
For slightly more complex returns, you can use tax software to help you fill out your return and might even be able to file your taxes online for free. However, if your taxes are highly complex, it’s probably worth hiring an accountant who can help you avoid hours of work, and save money on taxes.
If you’re a small business owner, an accountant could be crucial to helping you stay on top of matters such as employee payroll, business deductions, and quarterly tax filings.
Where to Look
To find a good CPA, ask for referrals from friends, family, or business colleagues. You can also check out the website of the American Institute of Certified Public Accountants to find CPAs with skills in particular areas, such as personal finance or employee benefits. Since you’ll have to work fairly closely with your CPA, take the time to meet with all the candidates in person and make sure your personalities are a good fit.
2. Insurance Agent
Most people carry at least a few types of insurance, like health insurance, auto insurance, and homeowners or renters insurance. Insurance agents make their money selling insurance policies, but that’s not all they do.
Because they know all the ins and outs of the insurance business, they can educate you about the different types of insurance and what you need based on your situation. Some insurance agents can also help you compare policies from different companies to find the best deal.
Cost
The good news is that working with an insurance agent costs you nothing. These financial pros make their money from the insurance companies. Some work for just one company and earn a salary; others work independently and earn their money from commissions on the sales they make.
You’ll benefit from the most unbiased service when you work with an independent life insurance agent.
Who Needs One
If you’re unsure whether you need an insurance agent, think about your situation. If you’re buying your first home, starting a business, or have a complex financial situation, an agent can be a big help.
They can explain policies in plain language, find the best coverage, and even get you discounts you might miss. Agents also advocate for you during claims, making the process smoother.
On the other hand, if you’re confident in your understanding of insurance and have simple needs, going without an agent could save you some money.
With all the resources available online, many people can research and buy policies on their own. But remember, insurance is about protecting against risk, so consider your comfort level with making those decisions alone.
Where to Look
The best way to find a good insurance agent is to ask for referrals. Talk to people you know, such as friends and family members, and ask where they buy their insurance. If they’ve been going to the same agent for years and have always been satisfied with the service, that’s a good sign.
3. Attorney
You might not think of an attorney as a financial professional. Most people’s images of lawyers are probably limited to the ones they see on TV, mainly courtroom lawyers defending criminals.
In reality, there are many situations in your financial life where it’s useful to have advice from a lawyer. An attorney can help you:
- Buy or sell a home, or any other kind of real estate
- Set up a new business
- Write or update a will
- Develop an estate plan to protect your assets after your death
- Set up a durable power of attorney to give someone else control over financial or medical decisions
- Negotiate a divorce settlement or a prenuptial agreement for a couple getting married
- Deal with any other legal situation involving finances, such as bankruptcy
Cost
Most lawyers charge by the hour for their services. Their rates vary based on location, experience, the area of law they work in, and the size of the firm they work for. According to LawKick, typical rates range from $150 to $500 per hour.
However, lawyers can also charge a flat fee for certain types of jobs, such as wills, estate planning, living trusts, and home purchases.
Who Needs One
It’s not always necessary to hire a lawyer for a fairly simple job, such as making a will. It’s perfectly legal to write your own will, and you can buy kits online.
In general, though, if you think you might need a lawyer, you’re probably right. There’s no doubt that hiring a lawyer is costly, but it’s better to pay a thousand dollars now than risk losing many thousands in a lawsuit later on.
Where to Look
To find the type of lawyer you need, start by asking for referrals from family and friends. For instance, if you know anyone who has recently bought a house, you can ask that person where to find a real estate lawyer. If you don’t know anyone who can recommend a lawyer, use sites like FindLaw and LawKick to search for attorneys who meet your needs.
Once you have a list of recommended lawyers, use the American Bar Association member directory to check out their backgrounds. Make sure the attorney is licensed to practice in your state and is trained in the area you need help with.
4. Financial Planner
A financial planner is to your money what your primary care doctor is to your health. Your financial planner is the big-picture person, the one you talk to first about any financial issues.
They can help you make a plan to pay off debt, save for college, or invest for retirement. And if you have a particular financial need that calls for a specialist, such as an attorney, your financial planner can help you find one.
Cost
Financial planners are often paid by the hour. Hourly rates generally range from $150 to $300, according to Stone Steps Financial. However, in some cases, you can pay a flat fee to a financial planner for a specific job such as a consultation, financial plan, or ongoing services.
Who Needs One
Hiring a financial planner isn’t cheap. For most people, it’s probably not economical to use one on a day-to-day basis.
Hiring a financial planner can be worth the cost in certain situations. These include:
- Managing Wealth. The more money you earn, the more sense it makes to pay a financial planner to help you use it wisely. A financial planner can help you coordinate all your accounts, save on taxes, invest wisely, and plan your estate.
- Becoming Self-Employed. Working for yourself, as a freelancer or as a small business owner, has a lot of perks – but it certainly complicates your financial life. Your income is less predictable, making it tricky to budget. You have to deal with issues like self-employment tax, special tax deductions for the self-employed, and quarterly tax filing. You also have different retirement plans to choose from.
- Approaching Retirement. If you’re preparing to retire, there are several things you need to know before taking the plunge. You have to figure out how much money you need to live on during retirement, how to maximize your Social Security benefits, and how to withdraw money from your retirement accounts to make it last as long as possible.
- Starting a Family. Getting married and having kids are momentous events in your life that have a big impact on your finances. When you get married, you have to figure out such matters as how to combine your finances and whether to file your taxes jointly or separately.
Where to Look
First, you want to make sure your financial planner has the right qualifications. Most people prefer to hire a certified financial planner, or CFP.
However, there are also skilled financial planners with different titles. For instance, a personal financial specialist (PFS) is a CPA who has extra training in financial planning and acts as a fiduciary. Hiring a PFS could make sense if you need help with taxes or other accounting needs in particular.
The best financial planner for you is one who works with clients whose needs are similar to your own. Ask around for referrals from other people who are in the same financial sitGarrett Planning Network. This is a national network of financial planners who work on an hourly basis.
5. Investment Advisor
Many people don’t understand the difference between financial planners and investment advisors – partly because articles often use the term “financial advisor” for both roles.
While financial planners look at the big picture, investment advisors focus solely on helping their clients choose the best investments. You can get advice about investments from your financial planner, but you won’t get advice about taxes or estate planning from your investment advisor.
Cost
Some investment advisors are “fee-only,” which means they make all their money directly from you. They can charge an hourly rate, but more often, their fee is based on the amount of the assets they’re managing for you.
Other financial advisors are “fee-based.” This means they make part of their money from fees and part of it from commissions they earn on the sale of securities, such as stocks.
Who Needs One
The more money you have to manage, the more you have to gain by making sure it’s managed well. That’s why most investment advisors focus on wealthy clients.
If your portfolio is any smaller than this, it’s probably not worth hiring an advisor to manage it. In the first place, you can’t as easily afford to spend 1% of all your assets on fees each year.
In the second place, you probably don’t have as many different investments to manage, so it’s easier to do it yourself. You’re better off handling your own investments, possibly with occasional help from a financial planner.
Where to Look
Some investment advisors – both fee-based and fee-only – are fiduciaries, who must put their clients’ interests first. Others conform to a much lower standard called “suitability.” This means that they are only required to make recommendations that are generally appropriate for your needs.
One way to make sure your advisor meets the fiduciary standard is to choose a Registered Investment Advisor. People and firms bearing this title are registered with the Securities Exchange Commission (SEC) and are legally bound to act as fiduciaries. You can find one by searching the SEC website.
6. Debt Counselor
Debt counselors, also known as credit counselors, help people deal with debt that’s gotten out of control. They can help you draw up a budget and develop a plan to pay off your debt. They can also give you advice on loan refinancing and debt consolidation.
If nothing else works, the counselor can negotiate with your creditors to set up a debt management plan (DMP). This agreement makes the debt counselor an intermediary between you and your creditors.
You pay a certain amount each month to the counselor, and they distribute the money to your creditors. In some cases, when the counselor sets up the DMP, they can negotiate with your creditors to get you a lower interest rate or waive penalties for previous late payments.
Cost
The cost of debt counseling depends on what kind of service you use. Many companies that offer debt counseling are nonprofits. These companies offer many services for free, including initial consultation, group meetings and workshops, and advice on budgeting and money management.
However, other debt counseling agencies are for-profit businesses and charge a fee for these services. In some cases, these fees can be quite high – and the companies don’t always disclose them upfront. So, before working with any debt counselor, it’s important to ask what fees they charge.
Who Needs One
Obviously, you only need debt counseling if you have debt. It also needs to be an amount of debt that you can’t easily manage on your own, and a type of debt that a credit counselor can help with. Here are a few ways to tell if debt counseling is a good idea for you:
- DTI. Your debt-to-income ratio, or DTI, is the amount you owe divided by the amount you make. According to experts, if your DTI is below 15%, your debt is at a manageable level. If it’s any higher than that, that’s a sign that you’re a good candidate for credit counseling.
- Credit Score. Having a good credit score – at least 700 – means you have more options for dealing with debt. For instance, you can refinance your loans at a better interest rate or take advantage of low-interest and no-interest balance transfers. But if your credit is poor, a DMP is often your best option.
- Type of Debt. Debt counseling services are especially useful for dealing with credit card debt and medical debt. Counselors know how to negotiate with these types of creditors for concessions like lower interest rates.
- Financial Situation. There are certain types of problems that debt counselors deal with regularly. In particular, they often help people with financial problems due to income loss, unemployment, increased expenses, poor money management, or divorce.
Where to Look
To avoid paying a fee for basic services, look for a nonprofit debt counseling agency that’s accredited by either the National Foundation for Credit Counseling or the Financial Counseling Association of America. Any reputable agency should be willing to give you information about itself and its services without asking for any financial details from you.
Once you find an agency that looks reasonable, start asking questions. Find out what services it offers, whether it’s licensed to practice in your state, and what qualifications its members have. If you need to deal with a specific type of debt, such as mortgages, student loans, or medical bills, you can look for an agency that specializes in this area. Also, ask about the debt counselor’s fees and get a quote in writing.
7. Money Coach
Like a financial planner, a money coach is someone who can help you with the big picture of your finances. The main difference is that money coaches look at your finances as just one part of your overall life.
They dig into the ways your personal habits, behaviors, and beliefs affect your ability to earn money, save money, and invest wisely. In some ways, they’re like a cross between a financial planner and a psychologist.
A money coach can help you:
- Determine what your financial goals are
- Figure out where your money is going now and where you can cut back
- Develop a budget and monitor your spending to stay on track
- Uncover unhealthy spending habits and get them under control
- Explore personal issues that could be holding you back, such as unwillingness to take risks or fear of being seen as stingy
- Learn how your finances relate to other parts of your life, such as your health and family life
- Make financial decisions that are in tune with your values
Cost
Fees for money coaches vary widely. J. Money, who blogs at Budgets are Sexy, says he charged his first money-coaching client only $50 for a one-hour call – a rate that others have advised him is “way too cheap.”
By contrast, Todd Tresidder of Financial Mentor charges clients either $1,750 for three coaching calls per month (usually over the first two to three months with a new client) or $1,200 for two calls per month. U.S. News & World Report says a typical rate for money coaching is at least $150 per hour.
Who Needs One
Financial planners can assist you with specific financial needs, such as investing, while money coaches teach you the skills you need to handle your own money wisely.
Basically, if you know what you want from your money and just need advice on how to achieve it, you should talk to a financial planner. But if you’re trying to get a handle on your relationship with money and you aren’t ready to start thinking about the specifics, a money coach would likely be of greater benefit.
Of course, it’s also possible to educate yourself about money and how to use it. There’s no shortage of books, websites, and workshops that discuss money and finances from just about every possible angle. However, a money coach can provide something these resources can’t: accountability.
Where to Look
If you want to hire a money coach, it’s up to you to figure out what skills the person needs to bring to the job. To get started, ask friends for recommendations, or do an online search on “money coach” or “financial coach” with the name of your city or state.
Check out the websites or blogs of the coaches you find and look for more information about their experience and training. You can also ask for references and contact them to find out how these current or former clients are doing financially.
Once you find a money coach who looks promising, meet with them personally to see if you’re comfortable with their personality and approach to finance. Also, make a point of asking them upfront about their rates.
Final Word
You probably don’t need all these financial pros on your team, especially not all at once. In fact, it’s possible you don’t need any of these financial professionals right now if you’re comfortable doing your own taxes, creating your own budget, or choosing your own investments.
However, there’s also nothing wrong with getting some help when you need it. Even if you prefer to handle most of your financial needs yourself, it can be useful to call in a pro for a specific job, such as planning for retirement or writing your will.
Think of these financial teammates as pinch hitters – waiting in the dugout, ready to step in when you need a hand.
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