Financial advisors don’t fit every financial situation, and while they can be an excellent resource for the right customers, their function is highly specialized for retirement accounts, investments, and financial planning of that nature. Here are some things you should know about financial advisors before you make the decision to hire one.
Their Services are Not Free
There is a common misconception that financial advisors will help take a look at your financial situation for free. This is simply not the case. Financial advisors provide a valuable service to their customers and set their fees according to the type of work they’re performing.
Some advisors charge by percentage of the value of the wealth they’re managing, others charge hourly, and some may have fixed fees. Be sure to discuss your advisor’s fees before hiring them so you can shop around and compare prices.
They Will Not Help You Get out of Debt
Contrary to popular belief, a financial advisor’s job is not to assist those who are in debt in returning their finances to manageable levels. In fact, a financial advisor usually has nothing to do with debt, but instead helps manage large investments, wealth, or retirement or savings accounts.
Financial planning is not only for the wealthy, but it does carry a cost when you hire an advisor, so someone in a high-debt situation would likely not have access to the funds required to hire an advisor. If you’re in debt and in need of financial advice, go here.
You Should Already Have a Goal In Mind
When you hire an advisor, it’s helpful to already have your financial goal in mind to give the advisor some sense of direction for your case. Whether you want to start a college savings account for your children, save for retirement, or need help managing your wealth, have some idea of what you need from your advisor.
With a goal in mind, the advisor will work with you on all factors of your income in order to successfully meet that goal. They’ll take a look at your monthly expenses, income, and any other financial information that will help craft a financial plan.
There Are Different Types of Advisors
There are two types of advisors: robo-advisors and traditional human advisors. Robo-advisors have emerged on the market in recent years as a cost-effective alternative to traditional advisors, providing digital asset management with almost no maintenance required.
With lower costs, robo-advisors are beginning to gain considerable popularity in the field of asset management. The usual fee is around 1-2% of your assets under management by the robo-advisor, making it much cheaper than hiring a human advisor.
Of course, if you don’t trust your assets to be managed by a machine, you can always go the traditional route and hire a human financial advisor. You’ll pay more, but you’ll also get that priceless human interaction and a personalized asset management experience.
Matching Tools Exist
If you’re just starting out in the financial planning world, there are tools that exist to help match you with a financial advisor so you’re not shooting in the dark, so to speak. The search for the right advisor can be a time-consuming (and frustrating) process without a little assistance.
Smartasset.com has an excellent advisor-matching tool you can use to find the perfect advisor for your financial situation. You’ll start by entering your zip code, from which Smart Asset will match you with hundreds of advisors in your area. From there, you can narrow down advisors by specialty, your financial needs, and more.
Don’t search aimlessly for an advisor when you can use these great matching tools to better meet your advisory needs. Go here to find the best financial advisor in Austin, Texas.
Financial Planning is Better With Help
While it’s certainly possible to manage wealth or save for retirement on your own, having help from a financial planner can be extremely beneficial. Advisors have specialized knowledge and access to information on financial markets that you otherwise may never have known about.
With assistance, you’ll be able to craft a foolproof financial plan to meet any financial goals. Your advisor will be there throughout the process to address changes or any requests you make, and you can sleep better knowing your money in under management by a knowledgeable professional.
Do I Need an Advisor?
Whether or not you actually need the services of a financial advisor depends largely on your financial situation. As mentioned at the beginning of this article, advisors do not provide debt relief services.
Planning investments or managing wealth is the specialty of advisors, so if you find yourself in a difficult financial situation, you may need to perform your own financial planning rather than hiring an advisor. A qualified advisor likely won’t address such situations anyway, since wealth management is their specialty.
Hiring an advisor can set your financial future up for success. With specialized knowledge and access to important financial tools, your investments, wealth, or retirement accounts will be managed professionally to yield the greatest results.
Be sure to stay aware of your advisor’s fees, and don’t show up without some sort of financial goal. “I need my wealth managed” isn’t quite a specific enough goal. Are you looking to save a certain percentage? Spend less? Be specific in your goals to maximize the results with your advisors.