Do You Need A Financial Advisor? When To Consider Getting One

The question is not whether you need to hire a financial advisor to help with investing, retirement planning, budgeting, taxes, insurance and estate planning. There are plenty of resources for do-it-yourselfers, sophisticated software to model endless what-if scenarios, Reddit threads packed with opinions and an entire internet’s worth of instructions.

But when facing high-impact, high-dollar or high-stress financial decisions, not everyone’s comfortable going it alone. General signs it might be a good time to call in the reinforcements include feeling stuck, overwhelmed, confused or just a bit unsure if you’re on the right track.

Money management help is out there in a variety of forms and price points. Below are five scenarios where the monetary and psychological payoff from getting professional help can easily cover the cost of hiring a financial advisor.

When to get a financial advisor

“The purpose of the financial advisor is to help clients unlock the next stage of their financial lives,” says Lindsey Young, a certified financial planner and founder of Quiet Wealth. (Here’s more on the nuts and bolts of what a financial advisor does.)

A good pro provides answers to questions you didn’t even know to ask in the first place. In fact, the cornerstone of financial planning is increased awareness — the “aha” moments that lead to more clarity, less anxiety and a clear path forward to achieving your money goals.

While there’s no universally applicable age, net worth or single perfect moment to hire a financial advisor, there are some situations where getting guidance is especially worthwhile.

1. You’re navigating a financial turning point

Marriage, divorce, job changes, expanding your family, receiving an inheritance, getting ready to retire — life events and financial events often go hand in hand. An advisor can help you evaluate the potential impact on your finances and recommend appropriate adjustments.

Many financial advisors are generalists who can guide you through your options and model various what-if scenarios. (See our tips on how to find a financial advisor near you.) Other times it pays to tap a specialist who has issue-specific expertise.

For example, a divorce financial advisor is trained to forensically analyze marital assets and identify ways the split will impact different areas of your finances — budget, taxes, savings, insurance needs, etc. — and establish a post-divorce financial plan. Depending on location and complexity of the case, these specialists may charge $150-$450 an hour. The investment — and potential payoff from avoiding costly divorce mistakes — is particularly worth it in complex situations or when significant assets are on the line.

2. Financial stress is affecting your mental health and relationships

Money worries can cause more than financial disruptions. According to Bankrate’s Money and Mental Health Survey, money remains the No. 1 factor affecting mental health, with 43 percent of Americans reporting that money worries have kept them up at night.

Anxiety can show up in many forms — from feelings of overwhelm and analysis paralysis to fights with loved ones about money.

Sometimes it’s not a single money issue that can throw you, but the pileup over time of multiple competing goals vying for your dollars — e.g., saving for college and retirement, juggling debt and managing everyday money obligations.

Simply reaching out for help is the first step towards alleviating money anxiety. You can start by setting up a one-time checkup with a financial advisor. Among other benefits a pro can help with:

• Bring order to your financial life. The crux of a financial plan is organizing your finances (such as debts and assets), prioritizing your short-, mid- and long-term goals and plotting out the path forward.
• Facilitate conversations between partners. If your money talks are fraught with tension (or you or your significant other avoid the conversational third rail altogether), an advisor can be the perfect foil. Bringing in a neutral third party can help diffuse emotions and steer the conversation to focus on actionable feedback and concrete advice.
• Serve as a sounding board and accountability buddy. Life happens and plans change. It’s reassuring to have someone to reach out to when you hit a roadblock. Plus, regular check-ins can keep you on track and motivated to reach your goals.

Don’t wait until you’re drowning in financial decisions to get help. “One of the best times to hire an advisor is when you’re starting to feel like you’ve done everything you know how to do and are wondering if there are other things you should be doing,” says Amy King, a certified financial planner and founder of Instar Financial Planning which provides fee-only advice for military veterans and federal civilians.

3. You’re feeling panicky or unsure about your investment strategy

Everyone gets jittery during periods of stock market volatility. It’s also when uncertainty or lack of experience can lead investors to abandon even the most thoughtfully constructed long-term investment strategy.

Consulting an advisor can prevent you from making rash moves that could set you back for decades. “While we can’t predict the future, we can offer perspective and expertise to guide you through turbulent times,” says Sue Gardiner, CFP and founder of South County Wealth Planning.

Options on who to call depend on how much hands-on help you need, how much you have in investible assets and if you’re looking solely for investment advice or more comprehensive financial planning services.

For example, you can hire a financial advisor for a one-time meeting to review your self-managed investments, use a robo-advisor to manage all or part of your portfolio or enlist a wealth manager to actively manage all of your assets. Some charge an hourly flat rate while others charge a percentage of the assets they manage for you (known as AUM, or assets under management).

Don’t let old tropes keep you from reaching out for help when you need it. “You don’t necessarily need to have a significant amount of money to work with an advisor,” says Justin Pritchard, CFP, a fee-only advisor and founder at Approach Financial Planning. “In fact, getting good advice early in your savings journey might make it easier to meet financial goals.”

4. When retirement is on the horizon

There’s a reason that much of the financial advice field focuses on retirement planning: Preparing for and transitioning into this milestone phase involves every area of your financial life.

Figuring out if you have saved (or are saving) enough money to retire is just the first hurdle. The follow-up questions only increase in complexity:

• How much can I safely spend each year and not run out of money?
• Which accounts should I withdraw from and in which order (e.g., Roth vs. traditional vs. taxable)?
• How can I minimize taxes before and during retirement?
• When should I file for Social Security? What about my spouse?
• Which Medicare plan, long-term care policy, annuity is best for me?

Money pros who carry the certified financial planner (CFP) designation are trained through coursework, exams and thousands of hours of on-the-job experience to answer these high-stakes questions and craft a roadmap leading up to and throughout retirement. They are also bound by fiduciary duty to act solely in their client’s best interests.

Another option within the CFP world is to consult with a retirement financial advisor. These specialists focus on the needs of soon-to-be or current retirees and can help with everything from Social Security claiming strategies, maximizing assets if you sell a business, legacy planning and more.

5. You want to make sure your loved ones are supported when you’re gone

Estate planning is an all-encompassing term that involves a lot of no-fun but important paperwork your heirs will thank you for putting in place when you’re permanently out of earshot. Or, less delicately, it’s the instruction manual for what happens to your stuff when you die or are incapacitated.

If your finances and family life are relatively straightforward you may be able to rely on free and low-cost options to assemble some key documents. Estate planning basics include a will, financial and medical durable powers of attorney, advance health care directives, updated beneficiary designations and perhaps a simple trust.

But if there’s even a whiff of complexity in your life — you’re a business owner, have a blended family, have special-needs dependents, want to leave a legacy that lasts for generations — an advisor can make sure your assets are handled how you wish. They often work in tandem with a lawyer to:

• Help you value your assets, including real estate and other valuables.
• Develop a clear and legally binding plan to distribute assets to your beneficiaries.
• Navigate state and federal laws and help you avoid probate and other complications.
• Devise ways to minimize taxes for you now and your heirs in the future.
• Set up trusts and other vehicles to establish a charitable legacy

Even if you’re not leaving behind life-changing amounts of money, a well-crafted estate plan can save you and your heirs time, stress and money.

Bottom line

An advisor can be a valuable resource, whether you’re looking for support navigating your entire financial journey or just need someone with expertise to guide you through pivotal moments. The scenarios above are just a few examples of times when it makes sense to consider hiring help.

You don’t need to be rich to work with a financial advisor. In fact, the first exploratory meeting with a planner is usually free, so keep your wallet in your pocket.

— Bankrate’s Rachel Christian contributed to this story.