Do You Need A Financial Adviser
June 24, 2009 – 6:43 amMy opinion? No. You don’t need to have a (professional) financial adviser. But you probably don’t need a professional to mow your lawn or change your the oil in your car either. It might still be worth it for you personally.
Your situation and desire to manage your own finances will differ from mine, but having a professional help you develop a complete financial plan does have some major benefits (assuming you find a good adviser):
- a financial adviser will help you review and develop a complete financial plan. Insurance, wills, estate plans (if necessary), investments, college savings, etc.
- an adviser can help you succeed in areas where you are weak. If you get scared with market tumbles or need someone with more discipline and experience, a financial adviser can be extremely beneficial.
- some advisers can help advise you on major purchases as well, and some may even offer to negotiate for you on things like cars.
- an adviser will monitor your portfolio and financial plan, and will provide guidance along the way. Many of us are so busy with our lives that we rarely take the time to review our financial progress and decisions regularly enough.
- an adviser will save you time. In many ways you’ll be exchanging time for money, like all things from a service-based industry. You’ll be paying someone to help you make decisions and keep track of your progress regularly.
Can you do all of these things on your own? Absolutely. But it will take some time, effort, and money. You don’t need to watch the market daily or know the difference between alpha and beta to be a successful investor. But it does help to read a few books and learn a few things. Actually reading a few books will help you get more value out of a professional adviser too! And there are a lot of areas more complicated (and more dull) than investing when it comes to your financial plan. Life insurance. Medicare/Medicaid. Social Security rules. Rule 72t early withdrawals from qualified retirement accounts. Tax and estate planning strategies. AB Trusts. The list is endless.
The choice comes down to whether having an adviser is worth it to you. And what is the cost? It depends on how the adviser is compensated. I would personally go with a fee-only financial adviser, so that I wouldn’t have to worry that his/her advise was biased towards high-commission products. I would also choose an adviser that would only give advice, but that would not make trades for me or have direct access to my accounts, but that’s just me. Most fee-only financial adviser charge anywhere from 1-2% of the assets under management, and some are truly on an hourly rate ($100-$250/hr I’ve been told). Over the years the resource I’ve seen recommended the most is the Garrett Financial Planning Network. I’ve never used or contacted them, but that is where I would start.
Another choice I would consider making would be working with a financial planner from Vanguard. I have the utmost respect for Vanguard, and I know they have numerous Certified Financial Planners (CFP’s) on staff. I think they even offer free annual planning services if you have enough assets at Vanguard ($500,000 to $1MM+ I think).
On a related note, I highly recommend having a “financial adviser” even if it’s not a professional. My financial adviser is my wife. She’s not as knowledgeable as a professional money manager, but she does have discernment and common sense. I’ve found that discussing financial choices and thoughts with her is always beneficial. You might also consider finding a man or woman you respect from your local church and asking them for advise when making major decisions. A fresh set of eyes and ideas can be quite helpful.
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3 Responses to “Do You Need A Financial Adviser”
My rule of thumb is to take care of your own finances until your investments can produce the same income as your job or your investments hit $1 million. At this point you need to look at professiona lmanagement and also at that point a fee only planner starts to look like a bargain.
They can get you into mutual funds with even lower mgt fees.
By The Weakonomist on Jun 24, 2009
With so much uncontrolled spending, I think a lot of families need a professional financial adviser.
By Joe on Jul 8, 2009