Meeting with a Financial Advisor

Is A Financial Advisor Right for You?

Jackie Lam

Has the thought of working with a financial advisor crossed your mind? Perhaps you’ve recently married, added a new bundle of joy to your household, or have said “yes” to a job offer that comes with a significant bump in pay. Or maybe you feel like you could use some money advice from a pro on eliminating your debt.

But how do you know if a financial advisor is right for you? Is spending the money to hire a financial advisor worth what you’ll get in return? Everyone’s situation is different. Here are a few things to consider.

What is a Financial Advisor?

In basic terms, a financial advisor is someone who can provide strategy and recommendations on how to hit your money goals. They’re trained and educated in a variety of areas.

FYI: Some financial advisors have a Certified Financial Planner (CFP) designation. It’s a formal recognition, and it means they’re a financial advisor who has met the rigorous training, education and ethical standards set by the CFP Board. When looking for a financial advisor, it’s typically a good idea to see if they have a CFP designation.

What a Financial Advisor Can Do For You

A financial advisor can sit down with you to map out an A-to-Z financial plan, complete with strategies to hit your goals and best protect your money. They can also meet with you on a regular basis to check your progress and make tweaks to your plan as needed. Here’s a sample of what a financial advisor is able to do for you:

  • Help see your financial picture
  • Come up with a game plan and strategy
  • Provide financial education
  • Recommend products and investments
  • Specialize with specific niches or life stages

Help you see your financial picture. You’re probably juggling a lot of financial priorities and may not know if you’re on track to meet your goals. A financial advisor can help you gather all your financial information into a single snapshot. They’ll look at your living expenses, debt load, savings, income and other assets.

If you feel like your understanding of finances is a bit muddled, an advisor can provide insight on how different parts of your finances impact one another and play into your big picture.

Come up with a game plan and strategy. A financial advisor will sit down with you to review your finances and determine your goals. Next, they’ll come up with money checkpoints in both the long- and short-term. They can meet with you on a regular basis to ensure you’re on track to hit those milestones.

Provide financial education. Besides planning and strategy, they can explain other aspects of finance, like investing or the benefits of an insurance policy.

Recommend products and investments.  Financial advisors often offer suggestions on Supplemental insurance products to buy, insurance policies to purchase, and what to invest in. They can also manage your assets, which includes making decisions on financial products to purchase, investments to make and moves to grow your money.

Specialize with specific niches or life stages. Some financial advisors might specialize with clients who are widowed, single parents, disabled, artists or freelancers, or who serve in the military. Why’s that? That’s because some populations have financial questions or challenges that are specific to them.

What a Financial Advisor Can’t Do For You

While hiring a financial advisor certainly comes with benefits, there are aspects of financial wellness that don’t typically fall within the realm of their training or expertise, including:

  • Rebuilding your credit
  • Filing your taxes
  • Changing financial habits
  • Providing support for psychological health with money

Rebuild your credit. While a financial advisor can help you create a big-picture financial strategy, they aren’t responsible for rebuilding your credit. A credit counselor or non-profit credit counseling agency would be able to help you with that.

File your taxes. A financial advisor can work with you on tax planning and strategies for savings; however, their areas of expertise don’t include bookkeeping services or tax preparation. Depending on your needs in that area, you can get help from a bookkeeper, accountant, a certified public accountant (CPA), or an Enrolled Agent (EA).

Change your financial habits. The role of a financial advisor doesn’t usually include helping you make shifts in your behavior to things like overspending or late payments. That is more in step with what a financial coach does. Financial coaches can work with you on your behaviors, perceptions and attitudes around money. A financial coach can also hold you accountable.

Improve psychological health with money. If you’re looking for someone to help you overcome personal money issues or address behavior that has created problems (i.e., a spending addiction), a financial advisor isn’t the solution. That’s where a financial therapist comes in.

A financial therapist can help you discover the causes behind your behaviors and attitudes around money, heal from past painful experiences, and provide guidance on making positive changes.

How to Look for Financial Help on a Budget

How can you look for help from a financial pro to protect your money and grow your wealth without breaking the bank? Here are some ways you can get the support you need:

Look at the Fee Structure

It’s important to look at a financial advisor’s fee structure and how much it might cost you to work with one from the get-go. Depending on your needs and what you expect to gain from working with such a professional, you might find that the cost might be more than what you anticipate saving in the long run.

Working with a financial advisor comes with a price tag that might not be affordable for many. On average, they can charge anywhere from $150 to $400 an hour. If they’re working on a more in-depth project, such as coming up with an estate plan or an initial financial assessment and plan, then you might be looking at paying $2,500 to $5,000.

Many financial advisors charge either a flat fee, an hourly rate, or a percentage of your assets under management. Financial advisors, unless they are fee-based, might also earn money from commissions on products they recommend and have you sign up for. 

Seek Professional Guidance on a Specific Goal

If you are looking for help with a certain aspect of your money matters, you can seek counsel and support for that specific goal. For example, let’s say you need some assistance with tax strategy. In that case, you can reach out to a financial advisor and just discuss your tax planning.

Or maybe your credit could be improved or your debt load lessened. A financial advisor can spend a budgeted amount of time helping you understand the pros and cons of repayment strategies and also point out options such as credit card consolidation and refinancing. They can also show you how to save money while still paying off your debt.

Find Affordable Financial Resources

While it’s not personalized guidance, you can check out articles, blog posts and how-to guides so you can make more informed decisions. You can also access personal finance websites and money apps.

Another resource to consider is 211. It is a free and confidential service that, among many other things, offers financial and budgeting courses. Classes are taught by tax experts such as CPAs and retired math teachers. You can get your questions answered on different personal finance topics, such as creating a spending plan, saving for retirement and preparing for tax season.

See What Resources Your Work Offers

Sometimes your employer’s EAP, or Employee Assistance Program, offers free financial counseling. Note that counseling through an EAP is usually intended to be short-term. So depending on the employer, you might be able to schedule a set number of sessions.

If you have questions about workplace benefits that affect your finances, such as a 401(k) plan, voluntary benefits or life insurance package, you can speak with a benefits specialist through your work to get a better understanding. Reach out to your Human Resources department to learn more.

Final Takeaway

Now that you know more about financial advisors, your next step might be finding one near you. Or, maybe you’ve determined that a financial coach or CPA is more what you’re looking for.

Achieve financial wellness within your means by:

  • Looking at your current needs
  • Evaluating different options
  • Learning about budget-friendly alternatives

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