Need a Financial Planner? 5 Ways to Know It’s Time

Don’t know when you need a financial planner? We have a few tips to know when the time is right.

Saving money can help you prepare for the future. But when do you need a financial planner? And if you do choose to contact a financial planner, what are your options, and which one is best for you? Those are important questions because there are a lot of choices out there including robo-advisory services, human advisors, or a combination between the two. You need to make sure that you are making the best choices for you and your unique financial situation. Here are some things you should look for to know when it’s time to contact a financial planner.

1. You want someone else to manage your money.

There are some people who simply do not like having to manage their own money, and you may be one of them! While there is certainly nothing wrong with that, it is important that you have enough financial assets that you want to be invested before you take the step of hiring a financial planner. The amount that you wish to invest should be greater than $100,000 in order to warrant making that move. If you have less than that amount to invest, then you might be better off placing your money in low-index funds for the time being until you have more capital.

2. You want to plan your financial future.

When do you need a financial planner? This can be a tricky question to answer because not everyone’s financial goals are the same. Depending on your unique financial situation, your goal might be to pay off your mountain of student loans as quickly as possible, or it could best to buy a new house in a few years, or maybe even to just save enough money for retirement. However, financial advisors can sometimes be expensive. If you have a solid emergency fund in the bank, then contacting a financial planner might be a good choice for you. If not, then you might need to get your financial house in order and start saving some money up before you hire an analyst to help you manage your investments.

3. You want the opinion of a trusted professional.

There are a lot of people that are savvy enough to effectively manage their own investments. But it can also be advantageous to get input from a professional that is more knowledgeable on the financial market and industry trends. While there is a cost associated with hiring a financial analyst, this is offset by the fact that an uninformed decision could potentially be detrimental to your investment portfolio. If you have gotten this far in the article, then chances are you are still pondering the question, when do you need a financial planner? As someone who may be seriously considering potentially hiring a financial planner, here are some other important details that you should know before you get started.

4. Financial planners can be expensive.

Granted, there are a lot of factors that can go into the cost of hiring a financial planner. While the fees can vary, most financial planners will charge between $1000-$2000 a year to create a comprehensive financial plan for you. And then for ongoing advice, expect to pay a few hundred every month. Some advisors charge a sliding scale based on a percentage of your invested assets. So, if you have investments that total $350,000 then you would pay the industry average of 1% of those assets or $3500 annually. The percentage charged can vary slightly, depending on the financial planner and your geographical location.

5. Beware of financial advisors who earn their fees from banks.

While it is not necessary a bad thing, it is vital to be aware that there are financial planners out there that do not earn their fees from their customers but rather from banks or investment companies. That distinction is important because this type of advisor only earns money when they sell your investments. So, unfortunately, this type of financial advisor may sell you something that earns them a hefty commission, but may not be the right choice for your financial situation. In the end, you may lose more money than if you hired a fee-only advisor. We don’t want to steer you away from all financial planners that earn their fees from banks or investment firms. However, it’s important that you are aware so you can pick the option that’s best for you.

For those thinking about hiring someone to manage their investments, when do you need a financial planner? Are there any important scenarios that you believe warrants the consultation of a financial planner? Please post your thoughts and share your stories with us by commenting below.