Handling your own finances may be the most common to most of us but the reality is, it's becoming hard to make a budget these days, pay taxes or even invest money for retirement. Sometimes we need someone to tell us what to do especially during significant events in our lives where we need to be smarter in making the right financial decisions. So how will you know exactly that it’s time to hire a financial advisor?
What is a financial advisor?
A financial advisor is a professional whose expertise involves guiding individuals from making retirement, taxes, and investing decisions. Most of us only refer to them as a financial advisor, but they do have professional designations. A certified financial planner and chartered financial consultant mean an advisor has obtained a higher level of competency.
Why should you work with a financial advisor?
A quality and experienced advisor knows how to listen to your goals in life and inspects your present finances. Strategies to minimize taxes, increase your savings, or reduce debt quickly are also included in their duties. Although a lot of planners provides free initial consultation, there are also those whose hourly charge is $100 to $200 where financial plans or any financial topic is discussed.
When should you need a financial advisor?
You don’t really need to work with a financial advisor on an ongoing basis but for situations such as the following, it’s best to ask for the best financial advice.
1. After getting your first job. Regardless of how much you earn per year, may it be $20, 000 a year or $200, 000 a year, as soon as you start your first job, it’s best to ask for the advice of a professional financial advisor. Aside from offering you a guide on how to start saving for retirement, the financial planner can also provide his or her insight in maximizing your employer’s benefits package.
2. When you get married or divorced. Seeking out the help of a financial advisor whenever you enter or leave a marriage is always a good idea. The financial advisor will give your advice without biased to help lower your financial losses during a divorce and make couples feel comfortable when discussing the combination of assets and income in marriage. It’s a great way for a couple to avoid making emotional mistakes such as when a spouse decides to keep the family home as a part of the divorce settlement but losing out on retirement savings that would’ve been of great value in the future.
3. Death of your spouse. As heartbreaking as it is, individuals do not just suffer from the loss of their loved one but they also have to endure a unique set of financial challenges now their alone. The income might be greatly reduced as the surviving spouse are the only one who works. A financial advisor can give an advice on the best way to manage assets such as home, the death benefit from a life insurance policy or investments. Financial advisors can really play a huge role since some surviving spouse may not even have any experience in taking charge of the money within the household.
4. You don’t want to deal with money. Let’s face it, some of us just don’t like to deal with money especially if we know from the beginning we’re not good at it. That’s not a problem, at least you recognize it. It becomes a problem if you don't. Hiring a financial advisor, in this case, one of the best decision you may be able to make. However, you do it need to have assets suitable for investments in order for an advisor to consider helping you out. Most of them only work with clients with investments amounting to $100, 000 or even $1 million to invest. That means you’ll have to look around for the most trustworthy, experienced, but affordable financial advisor.
5. When you have kids. There’s major financial adjustments and changes when you start a family. Having a financial advisor will help the married couple make smart estate planning such as putting a will together or trusts or 529 plans. You’ll be able to protect your assets when you or your spouse dies while 529 plans help secure the future of your children as they’re college savings funds plus it comes with tax incentives.
