Tap on the profile icon to edit
your financial details.

Do I Need a Financial Advisor?

Are you asking yourself, do I need a financial advisor? The short answer is yes, you probably do. A financial advisor is a professional who can assist you with your finances in a number of ways. They can help with investing, financial planning, retirement planning and more. If you have a certain level of investable assets and are thinking about your financial future, working with a financial advisor is key. If you need help finding a local financial advisor to work with, try SmartAsset’s free matching tool.

Why Financial Advisors Are Important

Financial matters can be quite complicated. Tasks like buying and selling stocks, preparing for retirement and protecting your estate so you can pass it on to your children are all complex and often involved. Handling all of them on your own is enough to make your head spin.

A financial advisor can help you make sense of all of these tasks. Financial advisors can holistically examine your financial situation and help you craft a financial plan to ensure you make decisions that are in line with your larger financial goals.

Furthermore, financial advisors have the investment expertise to make shrewd decisions in order to grow your money. A financial advisor can help you to create an asset allocation that fits with your goals and adjust it as you get older or your goals change. At the same time, financial advisors can help you to protect your assets, which becomes especially important as you near retirement. With the help of a financial advisor, you can ensure you’re ready to retire when you want.

Who Should Have a Financial Advisor?

There is no specific age, career point or salary level when it becomes apparent that you need a financial advisor. Generally speaking, when your financial life is more complicated than simply depositing your paycheck and taking out money, it is time to find a financial advisor. Many financial advisors have a minimum initial investment requirement, though, so you’ll have to make sure that the financial advisor you find is one who fits your financial situation at the time.

Another sign that it’s time for you to get a financial advisor is if you’re going through any major life transition. This could be anything from starting a family, receiving a sizable inheritance or going through a divorce. If you have kids, for instance, you’ll want to start thinking about saving up for their college education and possibly passing on an inheritance. The right financial advisor can help you do these things.

What Type of Financial Advisor Do I Need?

Do I Need a Financial Advisor?

There are two basic types of financial advisors you’ll need to choose from: asset managers and wealth managers.

If all you want is someone to help you with investments in stocks, bonds and other financial products, an asset manager is the choice for you. An asset manager will work with you to build a portfolio that tracks with your financial goals, risk tolerance and time horizon.

Wealth managers, on the other hand, are better for those seeking a broader view of their finances. In addition to helping you build your portfolio, a wealth manager will consider your overall financial health and take steps to protect your assets over the long run. A wealth manager can help with things like tax planning, estate planning, education savings and charitable giving.

Many financial advisors serve as both an asset manager and a wealth manager. Before you hire one, think about all the services you might possibly need.

Where Can I Find a Financial Advisor?

There are a number of ways to choose a financial advisor. One of the easiest options for finding one is SmartAsset’s free financial advisor matching tool. In less than five minutes, you’ll match with up to three financial advisors in your area. The final choice of who you want to work with is completely up to you, though.

Another tried-and-true method for finding an advisor is to ask family members or friends for recommendations. While asking someone you trust has its benefits, there are some major downsides as well.

Your family and friends may have very different needs and goals than you. Many people, for instance, find a financial advisor through their parents. The problem with this is that the needs of a 30-year-old are likely to be much different from those of a couple in their 50s or 60s.

If you choose to accept advice from a friend or family member, make sure the advisor can meet your needs. Ideally, you’ll ask for recommendations from a friend or family member in a similar financial situation.

Bottom Line

Do I Need a Financial Advisor?

There is no hard-and-fast rule for when it is time to get a financial advisor. There are few things to consider, though, if you’re trying to decide if you need a financial advisor. If you have enough money in your bank account to start investing, you might want to find an advisor.

Another sign you need an advisor is if you’re navigating a significant life change. For instance, if you’ve recently become a parent, finding a financial advisor can help you plan for your child’s future.

Tips for Finding a Financial Advisor

  • People who have financial advisors report greater financial security, and research suggests that working with an advisor can result in additional annual investment returns ranging from 1.50% to 4%. SmartAsset’s free tool matches you with up to three financial advisors in your area in five minutes. Get started now.
  • Before you hire a financial advisor, it’s important to understand how much their services will cost. Most advisors charge based on a percentage of your assets under management. However, there may be other fees involved. A key distinction to note is whether an advisor is fee-only or fee-based.

Photo credit: ©iStock.com/Georgijevic, ©iStock.com/AndreyPopov, ©iStock.com/jacoblund

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
Was this content helpful?
Thanks for your input!