Is It Worth Paying for a Financial Advisor?

Financial advisors offer many helpful services to those who hire them, including investment management, financial planning, advice, and more. But none of these services comes for free. Therefore, many have the impression that financial advisors are only for those who’ve got a lot of money. This isn’t true, however, as financial advisors can help people of all income levels. However, the cost is something that might give some people pause. 

Before you decide that hiring a financial advisor isn’t worth it for you, consider these things.

Financial Advisors Are Paid in Different Ways

Some financial advisors charge a set fee every month. Others charge a commission based on a percentage of the amount they’re managing on your behalf. Some charge a mix of both. If you can’t afford a flat fee, you may be able to find a financial advisor who will charge a percentage of what your account earns. This also provides the advisor with the incentive to grow your account as quickly as possible because the more you earn, the more they can earn as well.

Financial Advisors Can Teach You to Manage Your Finances

Whether you’re already on a sound financial path or not, a professional financial advisor may be able to help you improve what you’re already doing. For someone who doesn’t know a lot about finances, a financial advisor’s help can be particularly invaluable, however. A financial advisor can help you to get started on the right path to maximize your potential investments or earnings. They can also help you to create a financial plan and think about future financial goals like buying a house or saving for retirement.

The Benefits May Outweigh the Costs

While there is a cost to hiring a financial advisor, the benefits that you gain may outweigh what you’re spending to hire their services. If you hire the right advisor, they can maximize your earnings, help you to develop a budget and plan for future financial goals, manage your investments, minimize taxes you might need to pay on investments, and more. The amount of money that you earn via investments or save through the financial advisor’s advice could easily outweigh the fees or commission owed to that advisor. Plus, if you find an advisor who works off of a percentage of your investment earnings, then you may not have to worry about payment for that particular service.

Finding the Right Financial Advisor

If you’re thinking about hiring a financial advisor, it’s important to work with one whose strategies and area of expertise align with your vision and your needs. If something is very important to you, your financial advisor should be able to help you meet that goal or operate based on your preferences. For example, your financial advisor’s preferred investment strategy should match yours. An advisor who recommends aggressive investing when you prefer conservative may not be the best match.

Your Financial Advisor Can Help You Achieve Your Goals

A financial advisor who is more aligned with your goals and preferences can help you to better achieve those goals. For example, if you’re looking for more ethical investments, an advisor who specializes in those could help you to properly manage those investments. Additionally, if you have a specific financial goal in mind, paying a financial advisor who specializes in that area of finance can help you achieve it more quickly and effectively than you might have been able to on your own.

Considering a Robo-Advisor

With modern technology and the Internet came the rise of robo-advisors. A robo-advisor is a software-based platform that automatically makes investment decisions and manages your investments on your behalf. If you want to get started with investing but aren’t ready to or can’t yet afford the services of a financial advisor, a robo-advisor may be an option.

Downsides of a Robo-Advisor

While a robo-advisor may be able to manage your investments for you, it’s typically not going to be able to replace the skills and experience of a live person. Many people find that they get better return on their investments by working with a real financial advisor instead of a robo-advisor. Plus, a financial advisor may offer other services that a robo-advisor can’t. A robo-advisor may be limited to managing investments.

You Can Learn from a Financial Advisor

Among the many benefits of hiring a financial advisor is education. If you don’t know a lot about investing or how to meet your financial goals, a financial advisor can help you to learn.