Do I need a financial advisor? That is a question that really has a lot of baggage amongst the financial community. Some say that you should always have a financial advisor. While others say that you never need a financial advisor. But like most things in life, the truth lies somewhere in the middle. While every situation is different and every person is unique, for most people, you do not need a financial advisor. Let me show you when you would need a financial advisor and when you would not.
Situations Where You Might Need a Financial Advisor
Before I get into the situations where you might want to have a financial advisor in your corner I have to first give you a caveat.
Any FA you choose MUST have a securities license. They need a Series 7, Series 66, Series 65, or something similar. It would be even better if they were a CFP (Certified Financial Planner).
If your “financial advisor” doesn’t have at least one of the aforementioned licenses, they are not really an FA. They are insurance salesmen.
Here is an article explaining the differences in a little more detail.
When You Have Accumulated a Large Investment Portfolio
This is the first situation where you might need a financial advisor. Yes, some people can manage their investments just fine even when they have a large portfolio. But once you have had a lot of success and have accumulated a lot of invested dollars, your financial situation can quickly become more complicated.
That is where a financial advisor can come in handy. Financial advisors can help you navigate tax efficiency, estate planning, and several other situations that are common to those with large investing portfolios.
Make sure to choose the correct financial advisor though. Make sure that you get along with them, they don’t talk down to you, they have a securities license, and are willing to teach you the concepts that they are implementing in your portfolio.
The amount of a “large” investment portfolio can change based on the specific person. But typically the amount that I am referring to is $250,000. So if you have over a $250,000 investment portfolio, you should consider hiring an FA.
If Your Situation is Overly Complicated
Do I need a financial advisor? If your situation is overly complicated, then probably.
What do I mean by overly complicated? Situations like this:
- Complex trusts
- Multiple parties (not including spouses)
- Family drama
- RSUs
- Lottery winnings
- The sale of a business
- Etc.
The type of financial advisor that you would want to hire for a situation like this will depend on what you want and what your goals are.
You can hire a financial advisor who only charges you a fee for advice, one who charges you for assets under management, or whatever you want. But the key to this is that if your situation is complex, consider hiring a financial advisor to walk you through it.
You Have SEVERE Anxiety About Handling Your Own Investments
Do I need a financial advisor? If you have a LOT of anxiety about the prospect of handling your own investment portfolio, then maybe.
Take this one with caution though.
Money makes most people anxious to some degree. But if you have a LOT of anxiety then you might want to consider hiring a financial advisor even if you have a small portfolio and your situation is not overly complicated.
But wait!
That is why I put out this kind of content for you for FREE.
I do my best to give you the tools necessary to invest your money and achieve success with money without having to go through a financial advisor. Take this free information on my website, YouTube channel, and podcast and use it to propel yourself forward for free. 🙂
You can make a lot of really awesome investing and money gains without spending any money on an advisor. 🙂
Situations Where You Do NOT Need a Financial Advisor
When You Don’t Want to Bother Learning How to Invest
Yes, I understand that investing can seem daunting. It can be equally as confusing. But it doesn’t have to be. I do my best to break it down as simply as possible and give you a place to learn about all things money, not just investing.
So if you don’t want to bother learning about investing because it just doesn’t interest you or for whatever reason, I’m not sure how to help you.
You should not get a financial advisor because you don’t want to learn about how it works. That is how people get scammed out of their life savings and lose hundreds of thousands of dollars to unnecessary fees.
Take the steps to learn (at least a little bit) about investing so that you can start. You’ll figure out the rest of it over time.
When You Are Just Starting Out on Your Wealth Building Journey
When you are just starting out on your wealth building journey and just starting out saving for retirement and investing, you should NOT be paying financial advisor fees. They are completely unnecessary and will cut you off at the knees in the long run.
When you are just starting out, put your money into your company’s 401k plan and/or into a Roth IRA or something similar. Don’t pay ongoing fees to a financial advisor when you are starting out. You don’t have the money to pay the fees in the first place.
If you need to hire an FA and pay a fee to meet with them once or twice so that you can get rolling, that is fine I guess.
But still, I have a LOT of financial and investing information for you for free to get you started. Additionally, there are a LOT of other good and reputable financial advisors and professionals online who have also released TONS of free content for you so that you can learn about money for free.
Use those resources!
Final Thoughts
I was a financial advisor for several years. I get it. I have seen financial advisors bring on clients who are just starting out, who have really bland and non-complicated situations, and who have small portfolios.
I always refused to do so. I would send my potential clients to get free information online at some of the reputable sources that I would use myself.
That’s probably why I didn’t make it as a financial advisor. I was unwilling to take the money of someone when they could get the same information for free elsewhere.
My theory was that if I wouldn’t do something for my own mother, then I wouldn’t do it for you.
And I am here for you!
You can do this!
Until next time!
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