Why work with a financial advisor? (2024)

FAQs

Why work with a financial advisor? ›

Advisors can help construct an investment portfolio that aligns with your risk appetite, time horizon, tax situation and other considerations¹⁵. They handle ongoing portfolio management, including rebalancing and tax-loss harvesting, so you don't have to worry about making complex investing decisions.

A sudden influx of cash or assets raises immediate questions about what to do with it. “A financial advisor can help you think through the ways you could put that money to work toward your personal and financial goals,” Lawrence says.

For example, financial advisors can help you plan for retirement, budget, plan your estate and more. They also help you set your personal financial goals to reach milestones. For instance, some people might want to buy a house soon while others are focusing on saving for retirement.

The answer depends on your finances, your investment knowledge and the time you have to manage your own finances. The more complex your finances, the more likely a financial advisor may be invaluable. But even those with more simple finances may still find hiring a financial advisor to be worthwhile.

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

Source: 2021 Fidelity Investor Insights Study. Furthermore, industry studies estimate that professional financial advice can add up to 5.1% to portfolio returns over the long term, depending on the time period and how returns are calculated.

Although, there are major life events that may prompt you to seek out a certified financial planner for guidance on how to move forward. These life events events may include: A job loss, promotion, or major career transition. A recent engagement, wedding, or divorce.

Not everyone may require an advisor, but financial guidance is indispensable for navigating through the labyrinth of available information and complex decision-making that characterizes our financial landscapes today.

Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.

What are the cons of a financial advisor? ›

Not all relationships are successful ones though. Potential negatives of working with a Financial Advisor include costs/fees, quality, and potential abandonment. This can easily be a positive as much as it can be a negative. The key is to make sure you get what your pay for.

Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.

The passion for interacting with people and helping them with their financial goals is an ideal attribute that many employers seek. Express your desire to meet people and help them with their questions and objectives to show you're eager to assist others.

An advisor can help you plan how to invest your savings, and build toward your future goals and needs. An advisor may help to protect your income and lifestyle from unexpected events while avoiding emotional investing habits. An advisor's professional advice may play a key role in giving you confidence in your plan.

Those who use financial advisors typically get higher returns and more integrated planning, including tax management, retirement planning and estate planning. Self-investors, on the other hand, save on advisor fees and get the self-satisfaction of learning about investing and making their own decisions.