You can handle many financial tasks on your own, especially if you take the time to educate yourself on the best course of action. For example, by reading how to select investments in a 401 (k), you can better understand the key elements of managing your employer-sponsored pension plan. But more specialized, complex or individualized tasks may require you to consult a financial advisor.
Here’s how to know if you need an expert to help get your financial affairs in order, and how to select a financial advisor who will work in your best interests.
How to know if you need a financial advisor
If you are looking for investment advice, a human financial advisor can help. A robot advisor is also a great option for more routine – and generally cheaper – investment tasks. But where human advisors really excel is in helping you meet your specific financial needs and sometimes even helping you understand what they are.
“Sometimes our minds and hearts can keep us from making difficult decisions,” says Chris Briscoe, CFP, vice president and wealth advisor at Girard in the Philadelphia area. “Financial advisers can provide this unbiased perspective and help remove emotion. They take a step back and look at everything objectively to help you determine the best choice for you. “
So here are five situations in which you will likely need the assistance of a financial advisor.
1. You have no interest in doing so
It’s hard to do something when you’re not motivated to do it, and it’s hard to get motivated when you’re not interested in the task at hand.
“A lot of people are great at what they do professionally, but don’t have the time or interest to also manage family finances, as this can create stress that feels like a second. employment, ”says Michael DiNuzzo, CFP, financial advisor at DiNuzzo Wealth Management in Pittsburgh.
If you just have no interest in knowing more about your finances, you need an advisor.
2. You don’t have a global view of your finances
If you don’t know your financial situation, it may be helpful to call in an expert to help you determine where you are, where your money is going, and where it needs to go to meet your financial needs.
DiNuzzo suggests that if you don’t have a solid view of your own financial situation or a good idea of your current spending, that’s a sign that you need an advisor.
A good financial advisor, he says, can help formulate goals for clients and then show them “where they are in the current relationship with them and what strategies can be applied to close the gap in an easy way. to understand”. They do this based on knowledge of their clients’ finances and on “a deep personal relationship and an understanding of what matters most to them.”
3. You don’t know how you’re going to retire
If you don’t know how you’re going to fund your retirement – maybe even terrified you can’t afford it – you need to talk to a financial advisor, maybe quickly.
“Individuals retire once in their lifetime, but some financial advisers have helped hundreds, if not thousands, of people cross the retirement finish line,” says DiNuzzo.
Chances are, an experienced financial advisor has already dealt with your exact issues and knows how to fix them so that you can meet your financial goals. For example, an advisor can help you get your 401 (k) and IRA so you can maximize your retirement.
4. You are missing a detailed estate plan
While robot advisers can be effective for some tasks, human advisers may be needed for more complex tasks that could cost you a lot of money if not done correctly. For example, legal issues related to estate planning (think about wills and trusts) could end up costing you or your heirs a lot of money that you could have saved with a good advisor.
5. You plan to apply for social security
When you file for Social Security has a huge effect on how much you can collect from the program. And there are ways to increase your benefits without having to earn a higher salary.
“Statistically, most Americans leave tens of thousands of dollars behind, resulting in when they decide to file,” says DiNuzzo. “This is a one-off decision that deserves to be consulted by a professional.”
A good advisor will also be able to minimize your social security taxes – maybe even eliminate them – you thus maximize the income that goes into your pocket. Even if you don’t hire an advisor on an ongoing basis, they could quickly pay to hire one to navigate Social Security for you.
How to choose a financial advisor
Once you’ve decided that you need a financial advisor, it’s time to find one. But the best course of action is not to hire just any advisor, but rather one who will work in your best interests.
Look for the following three things when looking for an advisor:
- Find a paying trustee only. These advisors are paid by you, so they are more likely to work in your best interests. You pay more up front, but decisions will likely cost you a lot less than getting advice from a conflict advisor.
- Verify verified credentials. You want an advisor in good standing with the accrediting bodies that have granted titles such as the Chartered Financial Planner (CFP) or Chartered Financial Analyst (CFA) designation. Check an advisor’s credit on the CFA Institute website or the CFP Board website.
- Find an advisor who motivates you. A good advisor should be able to help you stick to what’s in your long-term best interest and stay motivated to follow through on them. It means being by your side during tough times and understanding your needs.
If you are looking for more details to find an advisor who will help you reach your financial goals, see this step-by-step guide to choosing a financial advisor.
At the end of the line
“At the end of the day, it’s about the customer and their financial needs,” says Briscoe. “Each client is in a different situation, at a different time in their life. Counselors are there to help you with your specific situation. “
So find an advisor who helps you reach your financial goals, not theirs.