Three-quarters of American adults are not self-directed when it comes to saving and finances.
But nearly all Americans have a 401(k). This means that most Americans could benefit from the help of a financial advisor. The question becomes when to get a financial advisor?
This is a guide to help answer that very question. No matter if you’ve already contacted an advisor or are just now considering one, this guide is for you.
When you land your dream job
Most often people only go to a financial advisor when it’s almost time for them to retire. However, certain factors like having a large amount of student loan debt may lead to a savings and investment deficit for many.
A financial advisor can aid in closing this savings gap, as well as helping you to navigate your new income.
Furthermore, with your new job title comes new responsibilities and opportunities that will take up most of your time. If you want more time back in your week, you may want to hire a financial advisor.
When you’re self-employed
Being self-employed means not only worrying about your own financial stability and retirement but making decisions about your employee’s financial futures. A financial advisor who works with businesses and business owners is able to offer non-biased, unemotional guidance.
Being self-employed often translates into greater variation in pay and more volatility, which changes the way that your finances are managed. With the safety net of corporate America, most employees should be looking to save 6 months of pay in a rainy day fund. If you’re self-employed that amount jumps to 18 to 24 months of pay to truly be covered for emergencies.
Financial advisors are a smart investment when it comes time to make 401(k) plan decisions for your employees as well. They’re able to cut through the options and make sure that you are choosing the group plan that best suits your company.
When you’re looking to start a family
Building a life together is more than combining pots and pans, and sharing a dresser. Thoughtful financial planning at the beginning of a marriage sets the couple on the road to long-term success. Like finding a church or a brunch place, establishing a relationship early with a financial advisor, before something goes wrong, can give you and your partner peace of mind.
Having children is when people begin seriously creating and maintaining their wills. But did you know that a financial advisor can help you set up a survivor or legacy fund? Lawyers are not experts in financial planning for the future, and it is a good idea to visit a financial advisor before your lawyer.
When you’ve been handling your own finances and want a second set of eyes
More than ever it is easier to DIY your finances without a financial advisor. However, the ease doesn’t mean this is the best option.
If you’ve been managing your own investing and savings, checking in with a financial advisor serves a couple main functions:
- A fresh perspective on your portfolio and savings goals
- Someone who will help make new investments that outperform
- Navigate through changes in your investments or your personal circumstances
Working with a financial advisor can also increase the amount of money you’re making. Many investors are not aware of hidden fees that may be incurred and how they affect DIY investors. Front-end fees, back-end fees, 12-b, and management fees all cut into your return, and a financial advisor can help maximize your investments.
Financial advisors work with clients at all levels of financial literacy, making them ideal resources for people who are already knowledgeable about their investments.
When your finances are complicated
Finance is personal and as such everyone’s financial situation has its own idiosyncrasies. It is impossible for an internet article or a book to include every possible scenario and give advice accordingly.
This is when to get a financial advisor. Financial advisors are able to become intimately acquainted with your finances.
Factors that increase the complexity of your finances also increase the need for a financial advisor. You may not visit your doctor for a common cold, but you will visit a doctor when considering cosmetic surgery. These factors include; a high net income, an inheritance, providing for a child with special needs
When you have more money than time to manage your finances
The question “do I need a financial advisor” is commonly answered by the question “am I able to afford a financial advisor.” Traditional financial advisors either work on a flat fee basis or on commission. This means that either you would pay for each billable hour or you would owe a percent (normally around 1%) of every investment.
What you’re paying for in either case is professional advice, another set of eyes and expertise, and someone who will oversee the day to day operations of your investments. These services not only make your life easier but can help you outperform DIY investors. Further, many financial advisors offer monthly fees based on your account to simplify the process.
Working with a financial advisor is best done as part of a long-term savings and investment strategy. Building a relationship with a trusted financial advising team allows you to take advantage of spur of the moment investment opportunities.
Protect your financial future
Knowing when to get a financial advisor is an important first step in taking control of your future.
If this sounds like you it’s time to explore your options. A good financial adviser is an invaluable asset both personally and for any business owner.
To see how SurePath wealth management takes an innovative approach to investing and financial advising, be sure to check out our blog.