When Is It Time to Hire a Financial Advisor?
April 2, 2020
People are different. Everyone has different goals, different paths to walk in this mad world.
When it comes to finances, everyone has a unique situation and a diverse collection of personal goals. Meeting those aspirations can be difficult in the best of circumstances, but navigating relentless change can make things even more challenging.
A financial advisor can help you create strategies and establish a structure to meet those goals and produce results. But how do you know if the time is right to hire an advisor?
How Advisors Help
Financial advisors have a range of expertise, so finding the right fit is always possible. Consultants aid with anything from investment advice to putting together a retirement plan to coordinating a personal savings approach.
Financial advisors will determine the basics of your financial situation and identify any goals you have. Details like a retirement plan, college savings, estate tax strategy, and insurance plans commonly fall under the purview of a consultant. These individuals are also dependable resources when unexpected financial events occur. Their expertise can steady any economic storm you find yourself in.
In the field of financial planning and advice, there are a number of industry credentials and designations. You can hire anyone from robo advisors, to a CERTIFIED FINANCIAL PLANNER™ Practitioner or CFP®, or to a Chartered Financial Consultant or ChFC. These titles are rendered by a trade association, like the Certified Financial Planner Board of Standards. This maintains a clarified specification of licensing.
Because advisors have to meet those industry standards, there is oversight. This keeps things professional and may be an additional evaluation factor as you seek an advisor to provide you with appropriate, accurate, and trustworthy information.
Timing is Everything
Establishing the right time to hire a financial advisor is not a standardized situation. You will have different reasons to seek assistance, so pay attention to your instincts as you take control of your financial future.
Many people believe they have the time and energy to deal with most of their economic objectives themselves. Those ideals are quickly shattered by the rush of reality. Often we simply do not have the bandwidth to critically examine our financial wellbeing and investment management the way an advisor can.
Finances and financial planning services are complex. They can become even cloudier as we get older, with extra difficulties developing by the year. Suddenly, that DIY financial goal looks as tricky as that kitchen sink you swore you’d repair.
Knowing when to hire a financial advisor is somewhat about knowing when to acknowledge you could use a hand. And needing help is not even remotely a bad thing.
On the contrary, turning to an experienced advisor to help manage your important assets can be completely advantageous if you are seeking better results.
Some people turn to advisors as they near retirement. Their financial wellbeing becomes more complex. More planning is necessary to address whether enough assets are in place throughout the course of life. Other hurdles, like wills and estate planning, take priority and require more than a little extra clarity.
Others turn to financial advisors when they receive a promotion or a further flood of money. Entering another economic tier opens the door to new opportunities. In this situation, having the right guidance can make the most of what’s next.
Turning to a knowledgeable voice can allow you to capitalize on opportunities over the long haul and produce a more stable financial stance for years to come.
Still others quite simply want to get emotion out of the game. Handling your own money is a passionate prospect and it can be hard to keep a clear head. You make mistakes and take them personally, which can lead to anxiety and oversights.
You want to amend your plan to get the best results, but sometimes a personal approach leads to surprising mistakes. An experienced financial advisor is trained to keep a cool head and make unbiased decisions about your money matters.
Major life events can serve as catalysts for obtaining financial services. Whether a divorce or inheritance, anything that substantially adjusts your monetary reality while bearing emotional weight can make significant waves. In cases of divorce, steering the quagmire of mutual finances is enough to produce powerful headaches. A financial advisor can take away conjecture – and the migraine – and present a brighter route to peace and prosperity.
Do Your Research First
Hiring a financial advisor has its own set of overtones, which require prudent planning and research on your part. In order to define the right time to seek help with your finances, analyze the costs and benefits of making such a big decision.
Hiring an advisor carries a significant economic responsibility, so be prepared to dig into various specifics of compensation. Make sure you understand what the advisor charges as well as which type of financial advisor best fits your financial goals.
Some advisors work on annual retainers. These advisors typically arrange a complete plan for your finances and charge accordingly. Others might set rates based on your assets under management, depending largely on an agreed upon percentage rate.
This cost will likely increase as your investment portfolio develops.
Some advisors might charge hourly rates. In this instance, you can evaluate your readiness to take on their services over a longer period of time.
Don’t be afraid to ask how an advisor is compensated. This should be substantive in your final decision.
Some receive fees from banks and investment companies, which means they earn commissions from selling you specific products and services. This may impact bias, as these advisors have a product to sell and you become a perfect customer. Advisors who work on commission always have a vested interest. That’s not always a bad thing, but it is important to know where any advice is coming from.
Investment advisers generally must register with the Securities and Exchange Commission (SEC) or state securities authorities to be able to provide financial counsel. In addition to this, the Financial Industry Regulatory Authority (FINRA) oversees securities firms and other brokers. FINRA also administers the qualifying exams that securities professionals at FINRA registered firms must pass to sell securities or supervise others who do.
Apart from these credentials, you will want to determine if your potential advisor is a fiduciary. These advisors must carry out your best interests first, as it is required by law. Financial operators like stockbrokers are likely not fiduciaries, so do your homework and ensure that any financial advisor speaks on your behalf first.
Finding The Right Fit
It's crucial to be up front with what your objectives are and what you bring to the table. Be transparent with your concerns and clear about what you expect to get.
Make sure you engage with a financial advisor that listens to you. You want to work with someone who takes your entire long term financial picture into account, not just your short-term goals. Align yourself with a financial advisor that can thoroughly explain their investing philosophy.
Ideally, you and your financial advisor will have a partnership that will last a lifetime. The best way to have a strong relationship is by starting off on the right foot with clear expectations. If you want to make smart financial decisions, it's important to know what you're getting into, as well as the types of financial counsel offered.
Delegating the management of your assets to an advisor should be a thoughtfully considered decision. It is a sound idea to interview several advisors and ask for referrals.
Perform a detailed background check. Ask for an advisor's credentials. Find out how long they've been in practice, as well as what kind of financial products they might recommend.
Financial and investment advisors understand that you will want to discuss your options with multiple professionals. It's up to you to consider financial advice from different viewpoints before deciding on the right fit for your situation.
Using specific interview questions can help clarify a solid working relationship. You will want to ask them about their availability of service and what resources are available to you as their client.
You'll also want to ask the advisor about their current assets under management and the level of communication that you expect. How often do you want to receive updates? How frequently do you want to have in-person consultations? How does the advisor measure success?
No two financial situations are alike. You will want a financial advisor that is able to customize their approach to fit your specific requirements. Some financial advisors have access to specialized expertise that may be the deciding factor in your unique situation.
Whether it's an unexpected divorce, early retirement, or planning for family members with special needs, everyone experiences different milestones in life. When these milestones happen, your financial advisor will be one of the first people you call. Securing the services of an advisor you trust can provide you with long term confidence and peace of mind.
Here at Sand Hill, we take pride in being personally invested in our clients. When you work with us, you have a partner that understands the unique challenges you face. From entrepreneurs and executives to individuals and families, we’re here to help you make the most of your wealth today and tomorrow. With us, you’re not just a name and numbers on a paper, you’re a person we want to get to know so we can help you reach your goals, streamline your life, and solidify your legacy.
If the time is now to seek the service of a financial advisor, find one that works for you. Do your homework and process the risks and rewards of employing this essential service. The right advisor can make all the difference in the world, whatever path you walk in this mad world of ours.
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