Do you need a financial advisor? Here’s how to tell

We have to talk. It’s probably not what you think, but it’s personal. So personal that 51% of Americans would rather not talk about it with friends or family.

What could it be? It’s your finances.

Let’s be honest. Nobody likes to talk about their financial situation. Whether you’re a millionaire or a working-class hero, discussing your finances with your friends and family, let alone an adviser, can be taboo.

But a financial advisor can be the perfect person to talk to about your money! It’s important to know when to ask for help with your investment strategy, but let’s lay the foundation first.


Are you ready to invest?

One of the most frequently asked questions in the Pyjama People forums is, “How can I start investing in real estate with no money and bad credit?” The answer? You should not. You need to resolve your situation and invest from a financial position.


What is a financial advisor?

A financial advisor is more than someone who advises investors. An advisor will help you create a financial plan to achieve your goals, whether that be financial independence or retirement planning for luxurious golden years.

It’s easy to wonder, Do I need a financial advisor? I am not rich. Financial advice isn’t just for the wealthy. Their plans can help with:

  • Budgeting
  • Savings
  • To invest
  • Insurance Strategies
  • Tax tips
  • Financial literacy

The plan created with them can help you build wealth, achieve your financial goals, and avoid predictable risks.

Make sure you look for a financial advisor who also has a guardian. Fiduciaries are obligated to act in your best interest. A financial advisor who is not a fiduciary (and there are!) can make decisions based on their own profits.

How are financial advisors paid?

You may be wondering how financial advisors are paid to do all this. Let’s take a look.

  • Fee Financial Advisors: Fee-only advisors have a fixed rate. The rate can be on an annual or hourly basis, depending on the work you have done. Another type of fee-only advisor involves a fixed fee, such as charging a fixed percentage of the assets they manage.
  • Commission-Based Financial Advisors: These advisors make their money by taking a commission from every investment they sell or open. Three examples of investments are insurance packages, retirement accounts or mutual funds, but there are many more. Keep in mind that these advisors are often criticized. There is an incentive to complete trades to earn more commission rather than benefit your financial future.
  • Fee-Based Financial Advisors: Note that this type is based on the consultant’s fee, not just on the fee as mentioned earlier. These advisors have a fixed fee, but they also earn a percentage of your investments in return for managing them

Help you plan your financial future

A financial advisor is important, no matter how much knowledge you have in the financial sector. Consultants have specific training to help you with your specific needs.

Some personalities find it difficult to plan ahead. It can be difficult to think about what you want to retire when you are just starting out in your career. A financial advisor’s expertise comes from working with a variety of people at different stages of life. They have been able to watch people’s financial future play out. What’s more, it’s exciting to know what your future is and how you can make it happen.

So you don’t have to worry about your money

Finances can be overwhelming, so why not hire a money manager? With a fixed plan, you know exactly what to do with your money without spending days searching. You know what your money is doing and why you have that plan in place. There is a bigger picture, so you don’t have to worry about every little thing.

Serve as an unbiased opinion of a third party

Money is personal, so financial decisions can be emotionally taxing. A financial advisor can be an unbiased, outside source of information during these decisions. This allows you to see financial decisions from both sides. Your advisor can also save you from taking a huge financial risk based on how you feel at the time. Likewise, if you and your partner can’t agree on a financial decision, an advisor can give their opinion based on the facts and be a good mediator.

Now you know it why to hire a financial advisor but you still don’t know when. Now let’s dive into those reasons.

Secondary Income

Earning an extra income is a move that many financial advisors encourage. Consultant Eric Brotman thinks it might be a good idea to start that afterthought — especially in these unusual times — by saying “you want the money.”

Maybe you’ve finally got around to starting your own business or owning a rental property. A financial advisor can help you handle multiple cash flows, especially if these are new investment opportunities for you. Even if you do have experience with additional income, a licensed financial professional can help you minimize your margin of error, resulting in optimal success.

Finding the perfect side job or extra gig doesn’t have to be rocket science. Take one of your passions and make it a lucrative sideshow. If you want to keep your hobbies separate from your profession, see what services are requested in your area.

Big changes in life

Even if you feel like your life has stagnated a bit during the pandemic, that doesn’t mean your life is unchanged. Many of us struggle to keep our jobs, our investments have become insecure, or we have an ever-growing pile of bills, among a number of other sudden changes.

Since we struggle to make ends meet, it may seem like a wrong move to spend more money on expert help, especially if it seems more important to spend money on bills, finding a job, or household items. In reality, taking a step back and asking for help now can save you more than you think.

You can hire an advisor to help you get started or to serve as a long-term investment mentor. In any uncertain climate it is essential to have reassurance and guidance. Many financial advisors use a method called behavioral coaching to manage your worries and help you plan for what’s to come.

Feeling overwhelmed

Now not everyone is a money guru or has an extensive amount of monetary knowledge. Some of us may not know what actions to take, where to spend the money, or how to pay off debt. It can be easy to get over your head. This can be a great opportunity to hit the reset button and either come up with a new strategy on your own or enlist outside help.

For example, a financial planner can help you organize your earnings and create a targeted timeline that works best for you. They can help you clear the clutter, set your priorities and work with you on a roadmap to relieve some of the pressure.

We get it: It can be easy to be suspicious when someone is trying to tell you how to spend your money. Your financial life feels private. We understand it! Plus, you may have some economic expertise in your wealth of knowledge. That’s great, but a different set of eyes – professional ones – may be all you need to sail in the right direction.

Preparing for the next chapter

Maybe you’re helping a child prepare for college or your retirement is just around the corner. Your financial advisor wants to do what they can to help you make the best decisions for your future. Even situations like family inheritance can be daunting. It can be a good thing to have an advisor to help clear the fog around investment assets.

Make sure you hire the right person for your situation. The qualities of a pension advisor may not be the same as someone who helps you or your child with further education.

Why Hire a Financial Advisor to Help You With Your Retirement? As you enter the next phase of your life, the previous one comes to an end. Making sure all of your past debts, assets, long-term care needs, and various bills are in order is an overwhelming task for one person.

Likewise, many of the same circumstances may apply when preparing for continuing education. Attending school usually invites debt acclamation and other expenses. No matter how organized you are, some things will undoubtedly fall through the basket. Better to be safe than sorry.

So you’ve decided you want to take the next step and find a financial advisor! You have the . answered why and when but now it’s time to get the . to answer WHO. There are a number of different certifications and exams that counselors can take. The main types of financial advisors are the following.

Investment advisor

Registered investment advisors (RIAs) manage portfolios and provide a strategy based on your investment portfolio and financial goals. They can help you understand how investing builds your wealth and they know which investment accounts to recommend.

Certified Financial Planner

Certified financial planners (CFP) look at the bigger picture and deal with complexity with ease. They consider your retirement savings, emergency savings, monthly budget, lifestyle aspirations, and insurance needs to create a plan and advice specific to you.

Asset manager

Wealth managers typically work with the wealthy. They serve the same holistic purpose as CFPs, but they also specialize in estate planning, accounting, and philanthropic decisions.

Robo Advisor

Robo-advisors are becoming more and more popular to make it easier for people to invest, especially with financial apps. They create automated portfolio recommendations for you based on your answers to questions about risk tolerance, financial goals, and timeline. If you want moderate to minimal human intervention, this is the route to take.

Having certified, professional advice does not mean that you are unable to manage your own money. In any case, rest assured that seeking the help you need is a sign that you recognize the benefits of licensed assistants leading you toward your ultimate goals.

It doesn’t matter if you are seeking financial independence, have experienced a sudden change in your life, are overwhelmed by a mountain of debt or are planning the next chapter of your life. No matter how comfortable or uncomfortable you feel managing your own finances, it can’t hurt to talk to someone to make sure you’re on the right track.

More about financial planning from Pyjama People

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