Personal Finance 

When do you need a financial adviser?

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Do you need a financial adviser?Not everyone needs a financial adviser or planner, but there have been a couple of times during my financial journey when a guide would’ve been nice. So when do you need a financial adviser necessary? I wasn’t sure, so I asked one.

“Everyone is different, so I can’t say yes or no to everyone having a financial planner,” says Matthew Watt, financial consultant at Heymont & Company in Los Angeles. “I would like to think everyone should want a financial planner, but that’s naive and biased of me. I provide value for people who are too busy to manage things on their own or need a second opinion.”

Indeed, time is a big factor when deciding whether or not you need an adviser. For example, I hired independent contractors earlier this year to help me with a freelance assignment. As an independent contractor myself, I wasn’t sure what paying someone else to work with me entailed financially. It took many hours of research until I finally figured out what I needed to do to protect my finances. And even after I spent so much time researching, I still wanted to play it safe, so I confirmed my findings with a financial adviser. I could’ve saved hours if I would’ve just gone to him in the first place.

Life milestones are also a factor when deciding whether a financial adviser is necessary.

“There are times in people’s lives when it’s a good idea to get some advice,” Watt says. “Some of these moments include getting married, having children, buying a home, inheriting money or property, changing jobs, etc.”

If you’re second-guessing your financial decisions, or if your financial options seem daunting and confusing, an adviser could be beneficial. For example, if you find yourself netting six-figures for the first time in your life, and you aren’t sure how to go about investing wisely, an adviser might be able to help you come up with a plan.

But advisers and planners aren’t for everyone. Watt says some people need to have full control of all aspects of their life, and in that case, they may have trouble working with a planner. As Bargaineering founder Jim Wang argued in a post a while back, much of the advice one can get from an adviser can also be found by simply putting in the time to research it. And financial advice usually doesn’t come cheap. A 2011 study by the Financial Planning Association found that the average hourly rate for a fee-only financial planner was just under $200 an hour, with the vast majority of financial plans typically taking at least 3 hours to complete.

But if you’re wondering whether or not you need advice, chances are you could probably benefit from some help. Of course, if you’re going to go with an adviser, make sure to choose wisely and carefully, but that’s another post entirely.

Have you ever used a financial planner? How did you decide it was time to get some help?

(Photo: Alan Cleaver)

{ 7 comments, please add your thoughts now! }

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7 Responses to “When do you need a financial adviser?”

  1. DIY Investor says:

    I have been involved in many financial planning/investment advisory sessions and I can say that by far many way more than pay for themselves.
    In fact, most of my business comes from people who followed bs on TV, subscribed to some guru newsletter, or followed the advice of a coworker or relative and lost a bundle.
    Studies today show that 50% of the population is approaching retirement totally clueless. Most people with a little advice could approach a third of their life in good shape. Sadly instead they will suffer.

  2. Simon Elstad says:

    Sometime back while reading through the Millionaire Next Door I noticed that the millionaires tend to spend quite some time consulting with their accountants and financial advisers. If one can, I think its best to consult with an adviser from time to time, maybe twice a year…two heads are better than one and in this case, the adviser is steeped in the financial scene, he has the “inside knowledge” and can make a few pointers that might improve your financial outlook and be worth your while.

  3. Personally, I think it’s good for everyone to meet with an adviser at some point. Most people think they have a good grasp on their finances, but their knowledge is more limited than they think. It’s always good to have someone who does it for a living to consult with because then there’s less pressure on you.

  4. dojo says:

    I’m doing a lot of reading/studying on my own and we never were in such a bad situation to need specialized help. Sure, if it’s the case, such a person can really help you mend your ways and get off that sticky situation faster.

  5. Claes Bell says:

    Yeah I’m definitely a believer in using a financial adviser in a lot of cases. If all they ever do is protect us from ourselves and urge us not to sell all our investments when they temporarily tank, that’s a pretty big deal. But yeah I think it’s always good to get another pair of objective eyes on your finances.

  6. Kristin Wong says:

    Agreed! And someone who does it for a living would also be on top of the latest changes to tax laws, which always throw me for a loop.

  7. Elloo says:

    Yes, yes and yes. Get one. They are not just for advising on investments, but they also manage the risk and tax consequences.

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