More than ever before, even average Americans are choosing to invest their money rather than just leaving it a savings account. One major reason for this change in the way people choose to use their money is the ability to invest online. Even the most amateur investor can easily learn how to invest online since most investment companies offer free training for beginning virtual investors.
For the majority of people, there will not come a time when they feel the need to hire a financial advisor to handle their investments. But as we all know, life can sometimes provide a fortunate financial windfall, such as an inheritance, or winning the lottery. However, more and more regular people, even if they haven't benefited from a financial windfall, are choosing to hire a financial advisor to help them maximize their savings for retirement.
So the question is: when is it time to hire a financial advisor? The decision to hire a financial advisor requires a careful cost/benefit analysis. What does it cost, and what do you expect to get in return?
There are three main reasons that people usually have for hiring a personal financial advisor, barring a personal financial windfall:
- They feel lost in planning for their financial future and need a roadmap.
- They just don’t want to deal with investing on their own. When it comes to money, a person who hires a private financial advisor is not the DIY type, and they just want a professional to take care of it.
- They like managing your money, but realize that their financial plan would benefit from an impartial and unemotional third-party opinion.
If you have reached the stage where you are ready to hire a personal financial advisor, for whatever reason, your first question upon making that decision is going to be 'how much does it cost?"
The website Money Under 30 has the following estimation of the cost of a personal finance advisor, "Most fee-only investment advisors charge a fee equal to a percentage of your invested assets. An unofficial industry benchmark is one percent, although advisors may charge slightly more or less. So if you have $200,000 to invest, you would pay $2,000 a year."
So it really looks like you are the only one who can decide if it is time to hire a personal financial advisor. The good news is that most professional financial advisors will sit down with you and go over your finances, not charging you for a consultation, and being upfront about whether you really need their help or not.
Which leads to the next question? How do you find a financial advisor you can trust? The Rules of Thumb blog from MoneyThumb suggest you take advantage of Paladin Registry. Paladin Registry is a free directory of financial planners and registered investment advisors (RIAs). The registry has the highest standards for its advisors, and it works with your requirements to find the perfect match.
Hopefully, all of the information we have provided in today's blog post will help you decide if it is time for you to hire a personal financial advisor. To help you even further with your finances, sign up for the MoneyUnder30 free personal finance newsletter. When you become a subscriber, you will automatically receive MoneySchool, their free 7-day email course on mastering your money.
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