What is a financial advisor for? The answer is different for every person who needs to make key financial decisions and has the money to pay for an expert to help them with that task.
According to Spectrem Group, 75 percent of millionaires with a net worth up to $25 million use a financial advisor, which means 25 percent do not. They likely have accountants, which is not the same thing.
Otherwise, they make financial decisions on their own, including investment decisions.
And, thanks to the internet, anyone can invest in stocks and stock mutual funds and inform themselves about companies they may want to invest in.
But the same is true about changing the oil in your car or repairing your roof. There are informational videos that can help you accomplish all of those tasks.
Similarly, financial matters takes a great deal of time and some skill, so it helps to have some knowledge of investing and finance. You may not have the time or the knowledge you need to be successful at your personal money management.
If that’s you, you might need a financial advisor.
Here are the questions you should ask yourself before deciding to sign on with a financial advisor:
What would I ask my financial advisor to do? Many people who use a financial advisor do so for the purposes of planning for the cost of college education for children or for retirement planning.
A financial advisor may not tell you how to handle those matters, but he or she is likely to know all of the possibilities that exist for saving for college or creating retirement income.
Am I willing to pay someone else to do it?
Most advisors today work off fees, which can be per hour or based on the amount of money the advisor manages, if he or she is making investments for you. Cost is a reason some people do not sign with a financial advisor.
Sweating the details
The other question to ask yourself is whether you like making financial decisions, or if you hate it.
Some people like to be on top of their budget and their portfolio. Others want to know they have enough money and want their extra money to make more money and don’t want to sweat the details.
That second group is likely to appreciate having a financial advisor to help make those personal money decisions.
Also, if you are the type to lose sleep over money concerns even though you are fairly well off financially, an advisor can eliminate some of that stress.
If so, you can spend your time with more enjoyable matters, like signing up for tennis lessons.