Do You Need a Financial Advisor?

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Financial advisors shouldn’t be thought of as a luxury that only the rich can afford. Advisors are a great resource for many people and can often provide a lot of insight. They take away the stress of worrying about money, simplify the investment process, let you know about more obscure or unknown investment opportunities, and can help keep track of how your investments are doing. Here’s how to tell if you need an advisor.

According to CNN Money, “The answer depends largely on how comfortable you are going it alone — and how good a job you think you could do overseeing your finances without help from a pro.” First, take a look at how familiar you are with investing. If you’re not familiar with the concept of asset allocation or picking funds, it may be time to seek help somewhere else. CNN Money also states that those who received professional help had a return of almost three percentage points higher than those who invested on their own.

Investopedia recommends reviewing this checklist to help determine if you need an advisor.

  1. Do you have a fair knowledge of investments?
  2. Do you enjoy reading about investments and doing research?
  3. Do you have expertise in investments? Do you have the time to monitor, evaluate them, and make periodic changes to your portfolio?

How do you find a right fit? Start by asking around for referrals from people you trust. “Begin by asking for referrals from colleagues, friends, or family members who seem to be managing their finances successfully. Another avenue is professional recommendations. A Certified Public Accountant or a lawyer might make a referral,” says Investopedia.

You can also seek advice from associations such as the Financial Planning Association and the National Association of Personal Financial Advisors. These planners are fee-only, meaning their only revenue comes from their clients. They don’t accept commissions and take a pledge to act in their clients’ best interests.