You may be at a point in life where you are wondering do I need a Financial Advisor? As with most things financial, there is no straight answer—it depends on your budget, investments and your long term financial plan.
Financial Advisors Can Help Everyone
The general population tend to assume that Financial Advisors only help wealthy individuals and families, but this is not accurate. Financial Advisors actually commonly assist middle-class families who need help with planning for retirement, saving for their children's education, buying a home, and taking care of other major financial goals.
Help With Emotional Decision Making
Financial Advisors help to eliminate a lot of emotional decision making for clients. When involved in a fairly risky investment strategy, people tend to react to changes in the stock market emotionally. If you have a Financial Advisor assisting you with your investments, they will be able to help you keep an emotional distance from your money so that you can make the best long-term plan for your money.
Your financial advisor will help you allocate funds into a portfolio that best matches your personal risk comfort level.
Robo-Advisors
There are more and more financial planning apps and websites referred to as robo-advisors and they are making financial management decisions easier to handle without the help of a financial planner. Many of these apps and websites offer very similar services to those of a financial advisor at a fraction of the cost. If you're confident in your money management skills and investment choices, you may not need to shell out money for a financial advisor with the help of these planning tools.
Big Life Changes
While robo-advisors are definitely helpful, sometimes they just won't be as beneficial as an actual financial advisor. Some situations are too personal for an algorithm to put you in the best position. Suppose you want to know how to deal with the tax consequences of an inheritance, or a family member suddenly leaves you a large sum of money. These are circumstances where you'd want a human who can understand and react to your particular situation.
If you are about to retire and aren't sure how or when to start withdrawing from RRSP and other retirement accounts, you may also benefit from hiring a financial advisor.
Being Comfortable With Your Financial Situation
If you feel confident, but would still like an advisor looking over your shoulder, you will most likely be able to get that help by paying a flat, one-time fee for a financial advisor once a year. You can manage your own accounts the rest of the time. If, however, you hate dealing with finances, don't understand the first thing about implementing an effective investment strategy, or receive a large sum of money you're not sure what to do with, a financial advisor is right for you.
When deciding whether to hire a financial advisor, look at your finances, and ask yourself if you feel like you know what you're doing. If you feel like you have a good handle on your daily financial needs, then you probably don't need to spend the money on one.
If you feel stressed over your money or feel like you're not making the best decisions possible, then a financial advisor would be a financially wise move that would most likely end up worth the investment.
