Every single person in this world has their job, profession and strong qualities. We need doctors to take care of our health, mechanics to repair our cars, and teachers to show us the path of knowledge. And since money plays a very important role in our lives, a question arises: do I need a professional to help me manage my finances?
Financial advisors are people who provide assistance and financial advice to their customers. They are also called money managers (help you manage your money), financial planners (help you plan and distribute your resources properly), wealth managers and more.
Having said that, it’s good to mention that many people do not trust a professional to manage their financial resources and prefer to do it themselves. Undoubtedly, this could prove to be a tricky and life-changing decision.
So, Do I need a financial advisor?
If you are a person who has decided they need financial guidance and help, this article will show you the main things you need to know. But for most of us, the most important is to decide whether you actually need help or not. So, are you ready to dive in? Le’ts start:
Three Questions To Ask Yourself
Before we start with some more details, try to answer these three simple questions:
1. Are Your Finances Complicated?
This is a very serious and fundamental question you need to answer before you hire a professional. Are you single or are you married expecting your first child? Do you want to make your first investments or you are “old”in the game and want to diversify your sources of income? How many credit cards and loans do you have?
Certainly, the more complicated your financial situation, the more you will need a person to guide and help you in these matters.
2. Do You Have Any Spare Money To Invest?
If you are a person who cannot afford to spend lots of money on various investment options and diversify their portfolio, then most probably you don’t need a financial planner. You must be aware that they will charge you for their services, so in the end, it will not be worth it. On the other hand, complex investment strategies will require a more professional and sophisticated approach.
3. What Do You Expect?
What do you want to achieve? Do you want to have a better financial discipline and save some money for retirement? Or, maybe, you want to become involved in the market and start successfully trading? In order to find the advisor you need, first, you have to be aware of what your goals are.
Don’t expect to beat the market and become rich in a fortnight. If a person or a company promises that to you, the chances are high they are trying to deceive you. Beware of the hundreds if not thousands of scams and Ponzi pyramids out there. Research the company/person if you have some suspicions (my advice is to do it regardless).
When You Need a Financial Advisor
Now let’s talk about the different situations when it makes perfect sense to hire a financial advisor.
Your Income Is High
There are many people who earn a lot of money but have no idea what to do with it. They either spend it inappropriately and invest it in unsuitable ventures or simply do nothing. Don’t forget that the higher the income, the higher the taxes you have to pay.
Not only will a financial advisor recommend the best things to invest in but also suggest ideas how to save money on taxes. This, consequently, will save you a great deal of effort and time and will give you the opportunity to focus on your job and make more cash.
You Plan To Start A Family
Many young people want to have a family but are worried, understandably, about all the financial uncertainties that go with it. Once you get married and have children of your own, you start thinking differently. Raising a child is no easy feat. You have to consider saving money for future education as well as life insurance in case of premature death.
Good financial planners will show you the ropes in this business and help you prioritize and make the right decisions.
You Are Approaching Retirement
If you are a person who is nearing the age of retirement, it’s advisable to visit with a financial planner whose expertise is retirement planning. For the ordinary person, the calculation and distribution of your pension is a very complex process.
You Are Self-Employed
If you are a self-employed person, then most probably your financial and retirement differs a lot from the other people. There is a wide variety of retirement plans for self-employed people, therefore a financial advisor will help make the best choice.
A good financial advisor can help people who work for themselves or have their own businesses make the best out of their current financial situation. Not only will they advise you on how to plan your retirement but also help you grow your business and increase your income. Furthermore, they might give you advice on how to best use the money you have put aside.
You Are In a Financial Mess
It’s not necessary to be in debt to be in a financial mess. Oftentimes, people have quite a few loans, credit cards and some of them are really complex. Maybe you are wondering how to optimize your expenses and choose better repayment options. A professional financial planner will help you achieve that.
Perhaps you have a kid with special needs and you need assistance to cope with the situation. Or a loan of yours is too complicated for you and you want to change the repayment option? All these require the attention of a pro, don’t you think?
When You Don’t Need a Financial Planner
When You Are On a Tight Budget
As mentioned earlier, there is no point in hiring an advisor if you have a tight budget. If you are a person who can barely meet their obligations, it’s not very smart to hire someone and be even more financially troubled.
The truth is – financial advice costs money, and if you don’t have this money in the first place, simply don’t do it. What’s more, if you don’t have extra money, how can a financial planner help you invest it in something profitable?
Keep in mind:
There are planners who work on an hourly-basis (flat fee). You might consider using the services of one since they will give you good advice on how to handle your current predicament. Once you have more free cash, you can fully dive in.
The Amount Of Consumer Debt Is Huge
Sometimes people have problems with their loans; if you are having problems with your consumer debt, it will be better to seek advice elsewhere – a credit counselor. Where can you do that?
Your Financial Situation Is Simple
If your finances are simple and you are not in a mess, then why would you seek professional assistance? If you are simply interested in specific topics, such as money market accounts or invest in mutual funds, you can check out one of the million sources of information.
There is no need to pay for information when you have access to a great deal of it. Find the info you want and need, learn about it and then proceed with something more.
All in all, you have to seriously consider hiring a professional who can help you manage your money as well as invest in properly.
However, before that, you have to make sure whether you need financial assistance or not. If you do so, then I am certain a financial advisor can help you benefit the most from your current situation.