Do I need financial advice? 

Do I need financial advice? 

4 mins readLast updated January 17, 2023by Kate Morgan

Who needs a financial advisor? In short, anybody who wants one. But there are some essential things to think about before retaining one. This article will explain the value of financial advice, look at when in your life you might need it, and reveal how much you can expect it to cost – all things that will help you to answer the all-important question.

Should I get financial advice?

Only 35% of US adults have retained the services of a financial advisor in 2022, and many Americans seem unsure whether they need a financial advisor.

There’s no hard and fast rule about the amount you need to be earning or the financial position you need to be in before you can seek advice, so the decision will really come down to what feels right for you.

Of course, what you can reasonably afford will always need to be part of the equation. 

Many people choose to get financial advice when they’re on the cusp of making big monetary decisions or when their income has increased (and they want to start investing and changing their savings goals but aren’t sure where to start). 

If you’re living paycheck to paycheck, it’s not always worth the fees associated with speaking to a financial advisor.

But if you’re unsure about the right investment path, searching for the best ways to save for retirement or seeking any other help with a critical aspect of your financial life, even one session of guidance from an experienced professional could have a lot of value.  

The advantages of financial advice

The helpfulness of expert financial advice shouldn’t be underestimated.

If you’re short of time, struggle to keep up with money matters or don’t understand the stock market even though you’d like to, financial advisors are a great way to remove some of the day-to-day stress of money management and increase your financial literacy.

Three of the most cited reasons to get financial advice are: 

  • For peace of mind – Your financial advice will come from an expert who takes the time to understand your needs. Rather than making all the big decisions yourself, you’ll be able to consult someone understanding and experienced. You’ll curb impulse spending urges and avoid poor-quality investments. In short, you’ll buy yourself a new level of peace of mind. 

  • To save precious time – Since your financial advisor will often be employed primarily to find the best investment strategies, you’ll save a lot of time not having to do this for yourself. Just remember to continue paying attention and approving and managing what your advisor does, as you never want to lose total control of your finances. 

  • To improve your financial strategy – This is particularly true regarding your long-term financial goals. Good financial advice will enable you to make small changes that become hugely impactful down the line, especially if you’re saving for important things like retirement or a child’s inheritance. 

financial advisors are a great way to remove some of the day-to-day stress of money management and increase your financial literacy

When should I get a financial advisor?

Many scenarios in life can make a person question, “Do I need financial advice right now?

In a lot of these, financial advice could be beneficial (as we’ve explored above).

Financial advisors are experts on a range of investment and wealth management topics.

Still, the help they give will depend on your scenario and the support you need, so it’s a good idea to work out exactly why you’re seeking financial advice before you reach out.

Here are some scenario/help examples: 

  • If you’re approaching retirement age and choose to seek help, advisors can be there to make sure you make good decisions regarding your 401(k), Roth IRA and/or Social Security withdrawals and plan 

  • If you’re looking to invest a lump sum but aren’t sure where to start, a financial advisor can explain and suggest strategies, helping you to explore suitable investment options 

  • If you’re mapping out the best ways to save for your children, advisors can help with everything from sending them to school to planning out their inheritance 

  • If you’re saving for a car, advisors can help you discover cheap deals and credit-based payment options that don’t rip you off 

  • If you’ve inherited wealth, unexpectedly or not, advisors can help you budget, plan and invest to ensure you’re getting high returns  

One important thing to consider regarding financial advice and when might be the right time to receive it is whether you need a one-time session with an advisor or ongoing financial support from them.

A single issue or complication that you need help with could be fine for your needs, but if you want consistent wealth management as a higher-net-worth individual, you’re probably better off signing a long-term contract. 

How much do financial advisors cost?

A recent report published by NFCC and Wells Fargo showed that while 62 per cent of Americans worry about their finances, only 44 per cent follow a budget.

If budgeting is a concern, then a financial advisor could undoubtedly help. But is financial advice something you can reasonably afford? Or would that, in and of itself, break the budget? 

If a financial advisor charges a flat fee, it’s generally between $2,000 and $7,500 per year for their ongoing services.

Some advisors will charge based on a percentage rate of the client’s assets and income.

Typically, this rate is between 0.25 to 1 per cent annually. The cost of a one-off session can vary depending on the type of advisor you reach out to and their experience level.  

Independent advisors, for example, will often be cheaper than advisors working for more prominent and reputable firms.

You must feel that your financial advisor will put your needs first, whatever their background.

It’s worth asking advisors straightforward questions about their credentials and specialist services to determine whether they suit you, especially if you want to work with them on an ongoing basis.

Plus, the transparency of their responses will tell you whether they’re a good option.  

Content writer

Kate Morgan

Kate has written for leading publications and blue chip companies over the last 20 years.