When Do You Need A Financial Advisor?

meeting financial adviser

There are many online investment websites, such as E-Trade, OptionsHouse, TradeKing, and Scottrade, all of which make it very easy to set up an account and start buying stocks. There are also many websites with reams of content about personal finance and investing, such as the Motley Fool, Stock Gumshoe and Investopedia. The ease of setting up investment accounts and the ready access to tremendous amounts of information about personal finance may create the impression that success in money matters is just as simple. However, for some areas of personal financial management—especially investing—you may benefit from using a professional financial advisor to guide you.

Choosing the right financial advisor could turn out to be the difference between having a reasonable, constructive path towards a sensible financial future, and recklessly losing the resources you already have and worked hard to accumulate.

It is helpful to view investing and portfolio management as a long journey, not as a stock picking game where you’re likely to make a quick buck. The venture is fraught with many dangers and some amount of risk is unavoidable, but if you start by working with a trustworthy, insightful advisor you may increase your chances of success from the beginning.

Selecting a licensed professional to help with financial advice may be helpful in another important way. When we rely upon money management tips from friends or family members and they do not pan out, it may lead to disappointment and at times even anger—to the point the relationship is damaged or ruined. Working with a professional takes some of that emotion out of the process.
Another area of personal finance where the “do-it-yourself” approach is not recommended is estate planning. Many people don’t write and complete their will documentation properly because the process stirs up unpleasant emotions. But leaving these loose ends can mean whatever assets you have wind up going to the government, instead of to the people or causes closest to your heart.

With wills dealing with issues of death and inheritance, we begin to see how much complexity is involved both in terms of emotion and the law. Navigating these choices alone and with no experience can become an overwhelming and very frustrating experience.

One must also exercise caution in choosing a professional to help with financial advice. The first thing to do is find out the individual’s licensing information, whether they are a financial advisor, Certified Public Accountant or attorney focused on estates and trusts. Online searches with regulatory groups such as the Securities and Exchange Commission and the CFP board can reveal whether or not the person you are researching has a current license, if his or her status is in good standing, and if the advisor has received any public notices of misconduct.

You may have heard the expression “a fool and his (or her) money are soon parted.” Educating yourself about all areas of financial planning, including trickier topics like investing and estate planning, is important. But don’t think that financial planning begins and ends with self-education. Finding trustworthy professionals to guide, assist and educate you can be useful. 

Interested in learning more? Visit NerdWallet’s Ask an Advisor.

 

Advisor image via Shutterstock