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Determining the Value of a Financial Advisor: Is it Necessary? | Bankrate

Do I Need a Financial Advisor? When it’s Worth It

Money is a crucial aspect of our lives, and it’s essential to manage it wisely to achieve financial stability. However, managing finances can be overwhelming, especially when dealing with complicated financial situations. In such cases, hiring a financial advisor can be the right solution. But how do you know if you need a financial advisor? Below, we discuss when it’s worth getting a financial advisor and what to look for when hiring one.

What Financial Advisors Do

Financial advisors help individuals manage their money, plan for the future, and set financial goals to achieve particular milestones. The services provided by a financial advisor vary based on the individual’s needs. For instance, a financial advisor can help you plan for your estate, budget, and retirement, among other things.

Additionally, financial advisors consider your family, age, career, and priorities when crafting your financial goals. They help you develop a strategy to reach those goals. Financial goals vary by person, as some may want to buy a house soon while others focus on saving for retirement.

When to Get a Financial Advisor

Not everyone needs a financial advisor, and it comes as an additional cost. However, it can be beneficial in achieving financial goals, especially when you feel stuck or unsure about how to get there. Below are some reasons why you might consider hiring a financial advisor.

Life Events

Major life events such as graduation, marriage, having a baby, or starting a business can cause one to reevaluate their financial situation. Financial advisors can help manage these events, ensuring you get on track or stay on track.

Lack of Experience

If you have complicated finances or don’t understand certain financial concepts, hiring a financial advisor can make a big difference. They offer personalized help and advice, which can help you grasp concepts and make informed financial decisions.

Developing a Strategy

Financial advisors help you hone in on your goals and create a roadmap to realize them. They guide you in making financial decisions such as investing, buying real estate, saving for emergencies, retirement, among others.

What Type of Financial Advisor Do You Need?

Choosing a financial advisor can be overwhelming, given the numerous options available. However, the type of financial advisor you choose depends on your needs and goals. Below are some types of financial advisors:

  • Certified Financial Planner (CFP): They have studied for thousands of hours and passed an exam to get to this level, making them knowledgeable in a wide range of financial subjects. They can advise you on everything from starting to invest to saving for long-term goals.
  • Robo-Advisor: A great entry point for those starting to invest in things such as an IRA. Once you choose your robo-advisor, you’ll fill out a questionnaire that determines your level of riskiness and assesses your goals, and then your robo-advisor chooses your investment portfolio.
  • Wealth Manager: Suitable for high net worth individuals who need personalized, tailored advice and someone to make financial decisions on their behalf. They are knowledgeable in managing investments, estate, tax planning, and other financial topics.
  • Financial Coach or consultant: They offer personalized help and advice and assist in basic financial questions but might not have any certifications.

It’s important to vet all professionals before hiring them and paying for their services.

Questions to Ask a Financial Advisor

Before hiring a financial advisor, it’s crucial to screen potential candidates by asking them a few questions. Below are some questions to ask:

  • Are you a fiduciary? This question is essential, and the advisor should answer yes. It means that the advisor puts your needs above everything else and will always act in your best interest.
  • How are you paid? Financial professionals can be paid through fee-only, commission-based, or a mix of both. It’s important to understand how the advisor gets paid before hiring them.

Related Facts

  • While hiring a financial advisor may come at an additional cost, it can lead to better financial decisions that can help you reach your goals.
  • Not everyone needs a financial advisor, but it’s essential to know when to seek one to avoid making costly financial mistakes.
  • Financial advisors can offer personalized help and advice, which can help you understand financial concepts and make informed decisions.

Key Takeaway

Hiring a financial advisor can help you make informed financial decisions and reach your financial goals. If you’re experiencing a life event, lack experience, or need help developing a financial strategy, a financial advisor can guide you. Additionally, it’s crucial to choose the right type of financial advisor and screen potential candidates by asking critical questions such as whether they are fiduciaries and how they get paid.


Knowing when to hire a financial advisor is critical to achieving financial success. While not everyone needs a financial advisor, it’s essential to seek one when necessary to manage complicated finances, life events, and develop a financial strategy tailored to your needs and goals.

Denk Liu
Denk Liu
Denk Liu is an honest person who always tells it like it is. He's also very objective, seeing the situation for what it is and not getting wrapped up in emotion. He's a regular guy - witty and smart but not pretentious. He loves playing video games and watching action movies in his free time.

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