Do I Need a Financial Adviser? Here’s How to Decide

Regardless of your intelligence or qualifications, sometimes you need professional advice. Even physics professors and astronomers can find personal finance overwhelming. You wouldn’t try to design your own home unless you’re an architect, and designing your financial future is no different. If you’ve read books and found online resources and still feel overwhelmed by financial planning, the considerations below can help you answer the question, “Do I need a financial adviser?” and choose the best professional for your goals. 

At What Point Should You Consider a Financial Adviser?

If you’ve got strong budgeting skills and are confident in future financial planning, you probably don’t need a financial adviser. However, if you’re wondering, “When do I need a financial adviser?” this guide is for you. The five circumstances below can lead even financially savvy people to consider a financial adviser.

1. Significant Life Events

When you experience major life events such as marriage, divorce, inheritance or the birth of a child, a financial adviser can help you navigate the financial implications and ensure you make sound decisions during these transitions that lead to greater long-term financial stability. 

2. Complex Financial Situations

If your financial situation is complicated, such as having multiple sources of income, significant investments or complex tax considerations, a financial adviser can help you navigate these complexities and optimize your financial strategies.

3. Long-Term Financial Goals

If you have specific long-term financial goals, such as planning for retirement, saving for your child's education or starting a business, a financial adviser can assist you in creating a tailored plan to achieve those goals.

4. Time Constraints

If you lead a busy lifestyle or have limited time to dedicate to managing your finances, a financial adviser can take on the responsibility of overseeing your financial affairs and providing regular updates and recommendations.

5. Emotional Decision-Making

If you tend to make impulsive financial decisions driven by emotions or biases, a financial adviser can offer an objective perspective and help you make rational choices aligned with your long-term financial well-being.

Financial Adviser or Wealth Manager: Which One to Choose?

If you want to hire a financial professional, the next question is, “Do I need a financial adviser or wealth manager?” Whether you choose a financial adviser or wealth manager will depend on your financial goals, current assets and specific needs. Here’s what to consider.

When to Choose a Financial Adviser

• You have a moderate level of wealth and need assistance with various financial aspects.
• You require help with specific areas like retirement planning, investment advice or tax planning.
• You are in the early stages of building wealth and want guidance on budgeting and basic financial strategies.

When to Choose a Wealth Manager

• You have substantial wealth and require sophisticated wealth management strategies.
• You need advanced financial planning, estate planning and tax optimization assistance.
• You want a more holistic approach to managing your wealth, with dedicated professionals overseeing different aspects of your financial life.

How to Choose the Right Financial Adviser For You

If you’ve determined that a financial adviser can meet your needs, you’ll want to choose a professional with strong qualifications and a track record of success. Here’s how to choose the right financial adviser for your family.

1. Determine Your Financial Goals

Before seeking a financial adviser, clearly define your financial objectives. Whether it's retirement planning, saving for a house or starting a business, having specific goals will help you find an adviser with expertise in the areas that align with your needs. Having multiple goals, such as retirement and mortgage savings, is common. Clearly define and prioritize your goals to help the financial adviser create a plan that best meets your needs. 

2. Assess Your Adviser's Credentials

Look for financial advisers who hold relevant certifications such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or Personal Financial Specialist (PFS). These designations demonstrate their expertise and commitment to professional standards. Additionally, check if they are registered with the appropriate regulatory authorities.

3. Understand Their Areas of Specialization

Financial advisers may have expertise in different areas, such as investment management, retirement planning, tax strategies or estate planning. Consider your specific needs and seek advisers who specialize in the most important areas or look for a financial adviser with broad expertise. 

4. Research Their Experience and Track Record

Look for advisers with a solid track record and years of experience in the financial industry. Research their background, check for disciplinary actions or complaints and read client reviews or testimonials to get a sense of their reputation and service quality. You can read client reviews.

5. Evaluate Their Fee Structure

Financial advisers typically charge fees based on a percentage of assets under management (AUM), hourly rates or a flat fee. Understand their fee structure and ensure it aligns with your budget and the services you require. If the fees are high, you could pay more than earning or cut into long-term savings. Additionally, be aware of potential conflicts of interest arising from their fee structure, such as a commission earned per trade.

6. Consider Their Communication Style

Communication is essential when working with a financial adviser. Schedule an initial consultation or interview to gauge their communication style, whether they listen attentively and if they explain complex concepts clearly. A good adviser should be responsive, proactive and able to adapt to your preferred communication methods.

7. Trust Your Instincts

Trust your instincts when choosing a financial adviser. You should feel comfortable with them and confident in their abilities and have a sense of trust in their integrity. If something feels off or you have doubts, continue your search until you find an adviser you trust and like.

Do I Need a Financial Adviser for Retirement?

Long-term financial planning can seem more overwhelming. Saving for retirement and creating an investment strategy to generate sufficient long-term wealth can be daunting. You can choose to use a financial adviser for retirement planning, for wealth management or as a consultant on an as-needed basis to create a personalized financial plan. 
If you’re ready to move ahead with a financial adviser, learn more about the importance of finding a financial adviser that shares your values and what to look for in a financial adviser and then find some of the best financial advisers here.

Frequently Asked Questions