Banking » Guides » Do You Really Need a Financial Advisor?
Advertiser Disclosure This website is an independent, advertising-supported comparison service. The product offers that appear on this site are from companies from which this website receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This website does not include all card companies or all card offers available in the marketplace. This website may use other proprietary factors to impact card offer listings on the website such as consumer selection or the likelihood of the applicant’s credit approval. This allows us to maintain a full-time, editorial staff and work with finance experts you know and trust. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impacts any of the editorial content on The Smart Investor. While we work hard to provide accurate and up to date information that we think you will find relevant, The Smart Investor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof. Learn more about how we review products and read our advertiser disclosure for how we make money. All products are presented without warranty.

Do You Really Need a Financial Advisor?

Financial advisors provide a range of services to help individuals and families manage their finances effectively. Do you really need it?
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Interest Rates Last Update: April 15, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Table Of Content

Everyone in this world has their job, profession, and vital qualities. We need doctors to care for our health, mechanics to repair our cars, and teachers to show us the path of knowledge. And since money plays a vital 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.

In this chart using FED Survey of Consumer Finances data, we can see that many people only start serious retirement planning after the age of 35. While under 35s have an average of $30,000 in retirement accounts, this increases significantly in the 35 to 44 age bracket. However, the increase is even more significant between the 45 to 54 age group and the 55 to 64 age group.

 

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.

What Can You Expect From Financial Advisor?

Major financial decisions include deciding to retire, take an early retirement buyout package, sell a business, cash out a mortgage, take a lump payment over a pension, start Social Security, or borrow from your life insurance. You could also be making a significant decision by doing nothing at all.

A financial strategy aids in the achievement of 3 key goals:

  • Create a Full Investing & Income Plan, Including Tax – A financial advisor will conduct a thorough evaluation of your current financial situation, including your assets, liabilities, income, expenses, and existing investments. This assessment helps them gain a holistic understanding of your finances. They will review your tax situation, identify deductions and credits applicable to you, and suggest ways to structure your investments and finances to optimize tax outcomes.
  • Estimate Large Decision Effect – A financial model is the best approach to evaluate the aim and compare options if you're considering a big decision like can I retire at the end of the year, should I utilize a windfall to pay off my mortgage early, or how much do I need to save to retire and maintain my lifestyle.
  • Test Different Retirement Scenarios – Who doesn't enjoy having a variety of choices? Maybe you've set your sights on retiring at the age of 55. Wouldn't knowing your retirement budget if you worked for another two years would be interesting? It could incorporate a risk simulation to stress-test your plan and guarantee you don't run out of money. A risk simulation can help investors feel confident that their plan will succeed by accounting for the range of investment returns.
  • Education and Guidance: A financial advisor will explain financial concepts, investment strategies, and the rationale behind their recommendations. They will help you understand your options and empower you to make informed financial decisions. They can also provide financial education resources to enhance your knowledge and confidence.

When You May Need a Financial Advisor

Now let’s talk about the different situations when it makes perfect sense to hire a financial advisor.

When You May Need It
When You May Skip It
Your Income Is High
You Are On a Tight Budget
You Are Approaching Retirement
Desire for Full Control
You Are Self-Employed
Your Financial Situation Is Simple
You Are In a Financial Mess
Self-Discipline and Knowledge

Many people earn a lot of money but have no idea what to do with it. They either spend it inappropriately, invest it in unsuitable ventures, or 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 they also suggest ideas on how to save money on taxes. This will save you a great deal of effort and time and allow you to focus on your job and make more cash.

If you are a person nearing retirement age, 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.

If you're a business owner, a financial advisor can assist you in areas such as business valuation, succession planning, employee benefits, and tax strategies related to your business.

If you're struggling with debt or want to optimize your debt repayment strategy, a financial advisor can help you develop a plan to pay off debt efficiently, negotiate with creditors if needed, and establish healthy financial habits.

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?

 If you prefer having complete control over your financial decisions and enjoy the process of managing your finances, you may choose not to hire a financial advisor.

This allows you to have the final say on all financial matters and make adjustments as needed.

If your financial situation is relatively simple and you have a good understanding of personal finance principles, you may be able to handle your financial needs on your own. This can include budgeting, saving, and basic investment decisions.

 If you possess strong self-discipline, a solid understanding of financial concepts, and are capable of making informed decisions, you may not require a financial advisor.

However, it's important to regularly educate yourself and stay updated on financial trends and strategies.

Hiring a Financial Advisor: Pros & Cons

Using a financial advisor has a number of benefits and drawbacks. Some investors who work with a financial advisor, on the other hand, aren't aware of or take advantage of all of the benefits listed below.

Pros
Cons
Experience and Investment Knowledge
Cost
Personalized Financial Planning
Potential Conflicts of Interest
Emotional Support and Discipline
Loss of Control
Time-Saving

Because most financial advisors are accredited, they have a broad understanding of investing. 

Not only that, but many financial advisors have a significant amount of experience, if not decades. 

A financial advisor can help you develop a personalized financial plan based on your goals, risk tolerance, and current financial situation.

They can assess your financial health, identify areas for saving, and create a roadmap to achieve your objectives. This personalized approach can provide you with a sense of direction and help you make informed decisions.

During periods of market volatility or economic uncertainty, it can be challenging to stay calm and make rational financial decisions.

A financial advisor can provide emotional support, keeping you focused on your long-term objectives and helping you avoid impulsive decisions driven by fear or greed.

Managing your finances effectively requires time and effort. By delegating this responsibility to a financial advisor, you can save valuable time that can be used for other important aspects of your life, such as your career, family, or hobbies.

Financial advisors charge fees for their services, which can vary depending on the advisor's experience, the complexity of your financial situation, and the services provided.

These fees can eat into your investment returns, especially if you have a relatively small portfolio.

 Some financial advisors may have conflicts of interest that could affect their recommendations.

For example, they might earn commissions by selling certain financial products or have partnerships with specific investment companies.

When you hire a financial advisor, you're entrusting someone else with your financial decisions. 

While this can be beneficial for many individuals, some may prefer to have full control and manage their finances independently.

FAQ

The cost of meeting with a financial planner ranges from $2,500 to $4,500 to make a plan. And if you maintain an ongoing relationship with the financial planner, it is approximately $3,000 to $3,500 per year but can be much more, depending on your requirements.

Many banks do indeed give you the option of using financial advisors to assist you with your investments and other needs. But it’s important to note that bank advisors aren’t free. As such, there is usually a minimum amount you must pay to continue to use their services.

In many cases, however, you may find the same information online and free of charge. Make a list of your most pressing questions and search them out online before investing in financial advice.

Look for financial advisors who hold relevant certifications like CFP, CFA, or Personal Financial Specialist (PFS). These designations indicate a commitment to professional standards, ongoing education, and adherence to a code of ethics.

Financial advisors may charge a percentage of assets under management, hourly fees, or a fixed fee for specific services. Some advisors also earn commissions from selling financial products. Make sure to understand their fee structure and any potential conflicts of interest.

Yes, you can maintain control over your investments with a financial advisor. A reputable advisor will involve you in the decision-making process, provide transparent reporting, and ensure your investment strategy aligns with your goals and risk tolerance.

Sign Up for

Our Newsletter

Join our community for the latest attractive savings rate changes ,expert insights, and member-only perks
Picture of Lorraine Smithills

Lorraine Smithills

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Search
Banking Reviews
Best Banking Accounts
Savings Accounts
Top Offers From Our Partners

UpgradeLogo

Savings Rate: 5.21% APY
Minimum Deposit:
$0
 
CIT-Bank-Logo
Savings Rate: 5.00% APY
Minimum Deposit:
$5,000
Quontic bank logo
Savings Rate: 4.50% APY
Minimum Deposit:
$100
 
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
Top Offers From Our Partners

Chase_logo

Promotion:
$300 New Chase checking customers enjoy a $300 bonus when you open a Chase Total Checking® account and make direct deposits totaling $500 or more within 90 days of coupon enrollment.. Expired on 7/24/2024
Chase Overdraft Assist
With Chase Overdraft AssistSM, you won’t be charged an Overdraft Fee if you’re overdrawn by $50 or less at the end of the business day OR if you’re overdrawn by more than $50 and you bring your account balance to overdrawn by $50 or less at the end of the next business day

UpgradeLogo

Fees:
No monthly fees No monthly fees and no overdraft fees. Plus get reimbursed for ATM fees with an active account 
Rewards:
Up to 2% cash back Up to 2% cash back on common everyday expenses for active accounts with monthly $1,000 direct deposit, and up to 1% cash back for other purchases 

Promotion:
$300 Use Promo Code “AXOS300” for a $300 bonus when you apply for a Rewards Checking account
Up to 3.30% APY
to get the maximum rate (up to $50,000) you’ll need monthly direct deposits of $1,500 (0.40% APY), 10 transaction on your debit card (+0.30% APY), average daily balance of $2,500 on Axos Invest Managed Portfolio (+1.00% APY), average daily balance of $2,500 on Axos Invest Self Directed Trading Account(+1.00% APY) and make full monthly payment on loans (mortgage, personal and auto) with Axos account (+0.60% APY).

PNC bank logo

Promotion:
Up to $400 Open a new, select Virtual Wallet product and receive $500/$2,000/$5,000 or more in qualifying monthly direct deposits within 60 days to earn a $100/$200/$400 bonus.
Subject to state availability
PNC Virtual Wallet ® is available in AL, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KY, MD, MI, NC, NJ, NY, NM, OH, PA, SC, TX, VA, WI, and WV. Virtual Wallet ® is offered in the state of MO with the exception of the Greater Kansas City area. Product availability may vary based on where you open your account and the Zip code of your primary address.

penfed personal loan

APY on Daily Balances
0.15% APY on daily balances of less than $20,000 or 0.35% APY on daily balances of $20,000 up to $50,000
Get paid up to 2 days early
Set up direct deposits and get your paycheck up to 2 days early

Promotion:
Up to $4,000 New customers may earn up to $4,000 when they open an eligible HSBC Premier checking account from January 8, 2024 through March 27, 2024 and complete qualifying activities:

• Receive a cash bonus of $1,500 when you deposit or invest $100,000 – $199,999.99

• Receive a cash bonus of $2,000 when you deposit or invest $200,000 – $299,999.99

• Receive a cash bonus of $2,500 when you deposit or invest $300,000 – 499,999.99

• Receive a cash bonus of $3,500 when you deposit or invest $500,000+

• Earn an extra $500 when you set up recurring monthly Direct Deposits totaling at least $5,000 for 3 months
Wealth Products & Advice
Get access to wealth products, insights and advice from an HSBC Financial Professional through HSBC Securities (USA) Inc
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.

#1 In Banking

Our Newsletter

Get expert advice, insider tips, fresh banking promotions and rate changes on savings accounts and CDs

Banking Promotions & Latest Rate Updates

Our Banking Newsletter

Sign up for our newsletter and gain access to expert advice,
insider knowledge, and exclusive updates