Home Business Do You Need An Investment Advisor? Ask Yourself These 5 Questions

Do You Need An Investment Advisor? Ask Yourself These 5 Questions

by Hannah Ray

You have some money to invest and you are wondering whether you should hire an investment advisor. There are many answers to this question, and they vary depending on who you ask. Asking an investment advisor will almost always tell you that you need one (shocking, I know). Ask your DIY friend, who has made a double in his investment over the past 2 years. He’ll tell you to avoid paying fees and just do it yourself. I am a Certified Financial Planner and have all the authority to give the correct answer. Are you ready? It all depends. You’re welcome.

Okay, now let’s get some clarification.

Hiring an investment advisor to manage money. A financial professional is paid to offer investment advice and manage clients’ assets for a flat fee. The Pros: Expert portfolio management, taking into consideration goals and cash requirements. Partner to assist you in complex financial situations. They can answer your questions and provide ongoing comprehensive financial planning. You can rest assured knowing that a professional is watching the market and reviewing your portfolio and making any necessary changes. They charge a fee. This fee varies, but it is generally 1%. While most advisors are skilled and ethical, it is possible to hire a substandard one. *Note: I will use the terms “financial advisor” and “financial planner” throughout this article. While there may be differences, I refer to an advisor that provides both financial and investment advice. For more information, see the SEC guidelines You can find more information about the different types of planners and how to choose one .

Manage your money: This is becoming more popular due to easy access financial information, online brokerage and low-fee market index funds. Benefits: Reduce investment advisor fees If you are interested in learning more about finance and managing your money, this is the place for you. You have the freedom to make your own decisions. Con: Your portfolio may not be as good as a professional’s. Your portfolio may not be able to adjust for market fluctuations because you might not have allocated correctly. You could also make costly mistakes like paying high fees elsewhere, missing tax savings, or making poor investment decisions. NASDAQ or Money below 30 offer tips for getting started if you’re looking to do it yourself.


Hourly consultation Meet with a financial advisor who charges by the hour to create a financial plan including Tether investment recommendations. They charge a fee, and they implement your recommendations. They meet with you once per year to assess the portfolio and make any necessary changes. Expert advice at a lower price. Con: You are responsible for managing your money and making financial choices between checkups.

Depending on your financial goals, knowledge, and current financial position, you will need to decide which option is best for you. As a financial planner, I prefer to offer either hourly or comprehensive financial management. There are people who can manage their money themselves. These five questions will help you decide which option is best for you.

1 How complicated are your finances? If you’re young and single, looking for simple investment advice for your brokerage account or 401K, Are you dealing with more complicated matters like inherited stock, margin trading, retirement distribution strategies, and securing your retirement? Are you expecting your financial situation to become more complicated due to the birth of a child or divorce? A professional investment advisor is needed for complex situations.

2-How much money do you have to

With more wealth comes more investment options and complexity, and a greater need for an investment advisor.stock market crashes like 2007. If your portfolio loses half of its value, can you resist the urge to panic? A professional can be a great asset in this situation. The fee is worth it if you require a financial advisor who can provide financial planning advice in all areas at all times. You don’t need a financial partner if you just want to put some money in the market and watch what happens. Hourly is a good option or you can try it yourself.

What are your expectations? An investment advisor who claims they know the secret to beating market will likely disappoint you. The efficient markets hypothesis (EMH) refers to an investment theory that says it is impossible to beat the market. Stock market efficiency means existing share prices always include and reflect all relevant information. Few investors, whether professional or amateur can consistently outperform stock market averages. A good advisor will likely earn better returns over time than an average investor. Don’t expect to see your money double in a matter of hours. If it does, you can read this SEC article on Ponzi Schemes .

5What is your level of sophistication? To be a money manager, you must have an understanding of the market and finances. Or be prepared to learn. You should also enjoy the process, as you will be spending a lot on your portfolio. Be realistic. FINRA (Financial Industry Regulatory Authority), has a wealth of financial tools. This site will help you manage your finances. You may want to invest if you suddenly realize that four hours have passed and you are still buried in their fund analysis. If the mere mention of ‘fund analyst’ is enough to make you want to scratch your head, you can visit CFP or NAPFA to find a fee only financial planner near you.

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