Do You Need A Financial Advisor?
- by Monica J. Weissmann, CFP, CIM, MEE
Monica Weissmann faced this exact question 25 years ago. Here’s what she learned.
You do not need a financial advisor if you have solid financial knowledge, like doing investments by yourself and still have time to live your life!
Monica’s journey into the world of financial advisory began many years ago when she realized that despite her engineering background, money matters were complex and time-consuming especially juggling two kids, a full-time job, and family obligations. What started as a search for simplicity and guidance (tell me what to invest in, why, when and how much), proactive attitude and integrity (care about my money more than your pocket) led her through the ups and downs of hiring not one, but three financial advisors, each failing to meet her expectations.
When Do You Need a Financial Advisor?
Experts suggest hiring a financial advisor when life events demand it: marriage, divorce, loss of a spouse, birth of a child, relocation, or changes in employment status. These moments often bring financial complexities that require professional guidance.
Pros and Cons of Having a Financial Advisor
Pros:
• Time Saved: Advisors handle the research and strategy, saving you time.
• Knowledge Acquisition: Learn from experienced advisors to become a sophisticated investor.
• Peace of Mind: Trusting your advisor provides reassurance in uncertain financial times.
Cons:
• Costs and Fees: Financial advice comes at a price, sometimes hefty.
• Finding Quality: Good advisors are a rare find.
• Building Trust: Trusting your advisor takes time and experience.
Financial Advisor or Financial Planner: Which Is Better?
While both offer guidance, financial planners focus on achieving financial goals, while financial advisors delve into investments to reach those goals. Advisors with planning expertise provide a holistic approach to financial management.
How Do Financial Advisors Make Their Money?
Financial planners and advisors may charge retainer fees, hourly rates, or a percentage of managed assets. Fee structures vary, typically averaging around 1% of total investments managed.
What to Look for in a Financial Advisor?
• Credentials and Reputation.
• Proactive Approach.
• Inspiring Confidence and Trust.
• Broad Experience and Professional Knowledge.
• Holistic Financial View and Education.
• Strong Support Team.
• Clear Strategy.
What are Challenges Faced by Financial Advisors?
Advisors face the daunting task of staying updated on financial laws, understanding new investment tools, and meeting high client expectations. Finding a good advisor requires diligence, but when found, they are worth holding onto.
In conclusion, the need for a financial advisor depends on individual circumstances. While some may navigate their financial journey independently, others find value in the expertise and guidance of a professional.
