When Should You Look For A Financial Advisor? [Video]

by Michelle Smalenberger, CFP® / November 7, 2022

When do you need a financial advisor? And what should you look for? 

There are a couple common areas that are very large and broad that actually describe when you need to be working with a financial advisor. 

You Don’t Have the Time

This is really common because life gets busy, we have so much going on, lots of hobbies to enjoy, work projects that drag on beyond the work hours. There are so many things we can do with our time, and finances rarely make it onto that list. But this is exactly what financial advisors spend their time on! You might not have the time to manage everything you need to, but we do. 

You Don’t Have the Interest 

When there is something you aren’t interested in or don’t like doing, you might want someone to help you. Finances are a very important aspect of life and you need to be on top of them. If you don’t have the interest in doing all the research, someone else does; we are called financial advisors. Sometimes we like to call ourselves a little nerdy because we actually love seeing how everything works together. We love seeing all the strategies that make your plan work and your money last. Interest is a category you might not have. 

Interest You Don’t Have the Knowledge

This is a unique one. There is so much knowledge that we each have about and know about money. But we use it in different ways. From general shopping and basic needs, we all have the knowledge for how to spend our money. But on a bigger level, from insurance to taxes, we may not be as knowledgeable about it. We need someone who is spending their time staying up on all of the changes to the economy, and the new laws and limits in each of these areas. Because of this, a financial advisor’s knowledge becomes very valuable. 

Any of these reasons are reasons you should be working with a financial advisor. Now that you know you should be working on it because you don’t have the time, interest, or knowledge. We need to figure out why we aren’t. Just because we know we need sometimes doesn’t necessarily mean we follow through on them. Let’s talk about three misconceptions, or myths, about why we don’t seek out a financial advisor if we know we need it. 

Common Myths about Financial Advisors

First, you might think they only sell products. This used to be the case. Historically, when you would work with someone on your finances, you would be looking for an insurance policy or investment product. If you wanted a mutual fund, you would pay a fee to meet with someone, who could sell you that product. But today, you can work with a financial advisor who isn’t selling you anything. This is called a fee-only financial advisor.

The second myth about working with financial advisors is that they don’t have your best interest in mind. And so what we call this is a fiduciary. This means that these advisors, who are fiduciary, are actually required and legally bound to have your best interest in mind. This is what we want to do. We want to create plans that have the best outcome for you, not us. You can know there are advisors who are working in this way, not just to earn more money for themselves. They might have to give advice that makes no sense for them. That’s how you can know if an advisor has your best interest in mind– if they are a fiduciary.

Lastly, you think financial advisors are only for the wealthy. You might think it will cost too much or you don’t have enough money to qualify. This is an important myth to bust, because in order to work with a financial advisor, you really just need money or income! Anyone can work with a financial advisor. There are lots of different types, with different goals, and different client types. Just because you think you don’t have enough money or can’t afford it, you should keep looking! 

These three myths are false. There are people today you can work with to get around all three of these problems. But besides time, interest, and knowledge, are there other reasons you might want to work with a financial advisor? 

Its too Complex 

One more reason is that things are just more complex. You might be getting more employee benefits from your job, like stock options, employer stock, deferred comp. You might be a high income earner or a corporate executive, and things are just getting a little more complex. Its on you to make sure you have a plan and strategy. But you can ask your advisors to handle those for tax complexities and plan your future so that you can keep as much money as possible.

You Have Financial Trauma 

Another time when you should work with an advisor is if you have had financial stress or trauma in the past. Maybe it was in your family, or maybe anytime you talk about money with your spouse it never ends well. These are times when it is great to bring in a financial advisor because they can bridge the gaps. They can help you overcome crippling debt, bad spending habits, or triumph against your goals. You need someone who can help you communicate to accomplish what you are trying to do.

You Don’t Know the Answer

The last is when you need to work with a financial advisor, if you just don’t know the answer. How commonly do we have a question and we just don’t know the answer and how it applies to our situation. We just keep think and thinking and don’t do something about it. We are trapped with our thoughts, and wonder ‘will I have enough for retirement’, or ‘will I be able to fund my kid’s college’, or ‘am I choosing the right benefits and insurance?’ This is where financial advisors can step in and help you find the answers. 

Next Steps for Finding Financial Help

When you don’t know the answer, you look to someone who knows how to find the right answer. Why should your finances be any different? Here at Financial Design Studio, we believe it is our job to educate you so you can make informed financial choices. Want to learn even more? We just launched our podcast! Click here or head over to your favorite streaming platform to take a listen! If you want to talk with a financial advisor about all these details, reach out! We would be happy to help! 

 

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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.