Broker Check
When do I need a financial advisor?

When do I need a financial advisor?

August 29, 2023

When do I need a financial advisor?

It’s a common misconception that only ultra-wealthy people need a financial advisor. It’s also an over-generalization to say that everybody needs one. The shortest answer to this burning question is: it’s probably sooner than you think.

Below are a handful of scenarios. If any of these apply to you, it may be time to contact an advisor.

You need help managing debt.

When you’re in debt—especially extreme debt—it may seem counterintuitive to pay a financial professional anything. After all, shouldn’t you be using all discretionary money to reduce the debt? Maybe not. In some cases, paying for a couple hours of a financial advisor’s time to help you develop a debt payoff strategy might be worth the cost.

Often, an advisor will meet with you for 20-30 minutes for a free consultation. He or she will then be able to tell you whether a few hours of their (paid) time may be beneficial to you, and if so, how and why.

You earn good money, but you spend it all each month.

On paper, you know you should have a surplus. But as every month goes by, that surplus never materializes. An advisor can help you see what you’re spending your money on, come up with a realistic budget, help you set up automatic savings transactions so you pay yourself first, and come up with a strategy for accumulating an emergency fund to handle events that are truly unexpected.

Accountability is an intangible benefit to hiring a financial advisor, but it can be what makes all the difference for a client that has trouble getting started with investing.

You are able to save diligently, but are unsure of how to invest your money.

A financial advisor can come alongside you and teach you how to invest smartly, while mitigating risk. Or, you can give the advisor permission to do the investing for you. Investing is not as simple as picking a stock. (Actually, picking a good stock is not simple at all). You mitigate risk through diversification, implementing tax strategies, and utilizing certain types of accounts to accomplish specific goals.

You are going through a major life event.

You are getting married and need help merging finances. You have a baby on the way. Your divorce is pending. You’re getting close to retirement. Your kids are starting to talk about college. You just graduated college and got your first professional job. These types of life changes require you to analyze your financial health, set new goals, and begin taking the next steps to achieve them.

You received a lump sum of money.

Someone left you an inheritance. You were injured and settled a lawsuit. You got a big bonus at work. Maybe you won the lottery. There are temptations to spend everywhere around you. Also, others may try to take advantage of your situation for their own gain. But life-changing money should be used to actually change the rest of your life, not just the next few weeks or months. An advisor can help you determine the best use of the money to help you for the long- term.

The bottom line.

Deciding whether you need a financial advisor is only the first step. The next question is determining what type of advisor you need and asking the right questions to make sure he or she is the right one for you.