Do I Need a Financial Advisor?

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Contributor, Benzinga
August 14, 2023

Navigating complex financial situations, from major life events to business ownership, may require extra support. Even investing can seem overwhelming for many people. Financial advisors are professionals specialized in helping you create financial plans that optimize tax savings, manage debt, and build a strong financial future. Just as you need a doctor for medical issues, a financial advisor has specialized expertise you can rely on for financial situations. Read on to answer, "Do I need a financial advisor?" for your situation. 

When Should You Get a Financial Advisor?

Not everyone needs a financial advisor. If you have a simple financial situation, it may not be necessary. When to get a financial advisor comes down to individual considerations. Here's when you might consider a financial advisor:

Complex Financial Situation

If your financial situation has become complex due to factors like multiple income sources, investments, properties, or changing tax laws, a financial advisor can help you navigate these complexities. 

Major Life Events

Life events such as marriage, divorce, having children, or inheriting wealth can significantly impact your finances. A financial advisor can guide you in adjusting your financial plan accordingly.

Retirement Planning

As you approach retirement, a financial advisor can help you develop a comprehensive retirement plan, including estimating your retirement needs, managing investments, and optimizing Social Security benefits.

Investment Guidance

If you're unsure about investing, a financial advisor can assist in creating an investment strategy aligned with your risk tolerance and financial goals. They can also provide ongoing portfolio management. Just ensure that you've chosen a financial advisor with a fiduciary responsibility to protect your interests!

Debt Management

If you're struggling with debt or need a plan to pay off loans efficiently, a financial advisor can provide strategies to manage and reduce your debt. They can work with you to create a customized solution that may allow you to pay off debt more quickly. 

Tax Optimization

A financial advisor can help you minimize your tax liability by implementing strategies like tax-efficient investing, estate planning, and utilizing tax-advantaged accounts. Many financial advisors are also CPAs with specialized expertise in maximizing tax advantages. 

Estate Planning

If you have significant assets or want to ensure your estate is distributed according to your wishes, a financial advisor can collaborate with estate planning professionals to create an estate plan to protect your heirs. 

Business Ownership

If you own a business, a financial advisor can offer guidance on business finances, succession planning, and employee benefits. They may also offer guidance on business loans, tax optimization, and other business-related government incentives. 

Lack of Time or Expertise

If you don't have the time, interest, or expertise to manage your finances effectively, a financial advisor can provide professional assistance and alleviate the burden. For many people, the peace of mind that comes with not worrying about their finances is more than worth the cost of a financial advisor. 

Behavioral Coaching

Managing emotions during market instability is essential for successful investors. A financial advisor can help you stay disciplined during market volatility, preventing emotional decisions that could harm your financial goals.

Selecting The Right Financial Advisor For Your Needs

Not all financial advisors are created equal. You want to hire a fiduciary financial advisor, meaning they are obligated to advise you in your best interests. Other considerations include: 

Assess Your Needs And Goals

The importance of self-assessment in determining one's financial needs and goals can highlight where you need additional help. Consider factors like their current financial situation, future aspirations, risk tolerance, and life events. Then, create a list of clear objectives to provide a foundation for selecting the right financial advisor.

Your list might include owning a vacation home, retiring by a certain age, having college savings for your children, paying off debt, or other goals. 

Research And Due Diligence

Thorough research on any financial advisor is essential! Common certifications for financial advisers include Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Certified Investment Management Analyst (CIMA)

If the financial advisor is registered with the SEC, you can check if they are fiduciary here. This is essential, as a non-fiduciary financial advisor is not required to offer you the best advice for your situation. Instead, they may attempt to sell products or services or suggest trades that benefit them but aren't your best choice. 

To find trusted financial advisors, you can check the Financial Planner directory, or search online locally. Google, Yelp, and the Yellow Pages can all offer resources. Be sure to check the professionals' credentials, experience and area of expertise, reviews, track record, disciplinary history, and client testimonials. Don't consider a financial planner unless they are fiduciary!

Understand Compensation Structure

Some financial advisors charge a flat rate or hourly fee, while others charge commissions per trade or as a percentage of assets under management (AUM). While each option has pros and cons, it's important to have an open and transparent conversation with potential advisors about compensation, ensuring they fully comprehend the costs involved. When making an initial appointment or consultation, ask about the fee structure and how much you can expect to pay for their services.

Hourly fees are the simplest and best for those who may only need limited sessions or general advice. AUM or flat fees may be less costly if you want more comprehensive financial management or for high-net-worth individuals. Per-trade commissions aren't the best structure, as it incentivizes trading, which may not be in your best interest. 

However, the key is understanding potential financial advisors' pricing structure and how it will affect your portfolio and wealth planning. 

Interview Potential Advisors

A financial advisor performs an essential role in your financial future. In addition to strong credentials and a history of results, you need to choose someone you can work with. Conducting interviews or consultations with prospective advisors gives you a feeling of whose management style best aligns with your goals. 

You should perform due diligence before meeting any financial advisor. When you go into the meeting, you should know that the financial advisor is:

  • Fiduciary
  • Certified
  • Experienced
  • With a portfolio of success

When you interview them, you can confirm these points and ask about their expertise, approach, and compatibility. Consider asking:

  • When and where did you get your certification?
  • Why is being fiduciary important to you?
  • What is your area of expertise or specialization?
  • What is your investment style (aggressive, conservative, etc.)?
  • Can you tell me about portfolios similar to mine that you've managed? What were the results?
  • Based on my goals, what opportunities do you see in the short and long term?

When you meet with prospective financial advisors, you can gauge their ability to listen, communicate, and tailor their recommendations to your specific needs. Consider:

  • How well do they respond to your questions rather than give general answers? 
  • Did they take their time with you? 
  • Do they have experience with similar goals or similar financial situations? 
  • Do you feel comfortable bringing concerns or doubts to them?

Evaluate And Make A Decision

Once you've spoken to at least two to three financial advisors, it's time to evaluate the information gathered. You can compare proposals, recommendations, and communication styles to determine which advisor aligns best with your goals and preferences. 

Did one advisor stand out for their unique recommendations, or did they all offer similar advice? Who did you feel most comfortable with? Which advisor has the strongest track record of success in similar situations? 

To assess financial advisors, consider:

  1. The ability to provide customized solutions
  2. Ethical conduct
  3. Track record of success
  4. Expertise related to your situation
  5. Long-term commitment to your financial well-being
  6. Your comfort in working with them
  7. Certifications, including stated fiduciary status

These factors can help you easily select the best financial advisor. If it's not immediately clear, assign each financial advisor a score between zero and five for each of the seven criteria. The financial advisor with the highest total score will be the best choice for your situation.

When To Get a Financial Advisor

Not every life event requires a financial advisor. In fact, in many cases, if you're willing to research and learn about financial planning, you don't need a financial advisor. For example, you could set up a Roth IRA and invest in index funds without the help of a financial advisor. However, if you want to create a comprehensive plan that includes various factors, complex situations, and multiple income streams, a financial advisor can help. To get started, find some of the best online financial advisers or the best financial advisers. You can also consider robo-advisers for investing.

Frequently Asked Questions


Should I use a financial advisor?


Whether you should use a financial advisor depends on your situation. For many families, a financial advisor can offer guidance and set a direction for tax optimization, investment advice, and more. However, you may not need a financial advisor if you’re willing to research financial opportunities.


Should I get a financial advisor?


Whether you should get a financial advisor will depend on your goals and financial situation. If you’re crossing a major life event, need help with estate planning, or need investment or debt repayment advice, a financial advisor can help.


Is a financial advisor worth it?


A financial advisor can be worth the cost if they can help set up a tax-optimized investment strategy or create a plan to get out of debt. However, not everyone needs a financial advisor, and often researching simple tax-optimized retirement advice can give you similar results.

About Alison Plaut

Alison Plaut is a personal finance writer with a sustainable MBA, passionate about helping people learn more about financial basics for wealth building and financial freedom. She has more than 17 years of writing experience, focused on real estate and mortgage, business, personal finance, and investing. Her work has been published in The Motley Fool, MoneyLion, and she is a regular contributor for Benzinga.