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When do you need a financial adviser?

Posted By Kristin Wong On 11/11/2013 @ 2:30 pm In Personal Finance | 7 Comments

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 [3] 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 [4], 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)


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[3] Heymont & Company: http://www.heymontcompany.com

[4] in a post a while back: http://www.bargaineering.com/articles/financial-adviser.html

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