When Getting Financial Advice Matters Most

Managing your personal finances entails overseeing cash flows, saving excess funds and investing for the future. On the surface, the process seems straightforward, but it can be quite complex and time consuming for the average person. Fortunately, getting financial advice can help streamline things.

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A skilled financial advisor can help you optimize the way you budget, bank, insure risks, manage tax positions, plan for retirement and invest. 

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I've Always Done It Myself

Regardless of your knowledge of finance and your familiarity with capital markets, working with a financial advisor can be wise. An unbiased professional can help you thoroughly understand your risk-return profile, assess the health of your near-term and long-term financial condition, and vet the efficacy of your investment strategies.

At best, a consultative engagement could highlight significant enhancement opportunities and improve your financial well-being. At worst, it could affirm the path you're following, expand your network of resources and give you peace of mind.

If you decide to get some independent financial advice, be sure to work with a fiduciary. This is a type of advisor that's legally and ethically committed to always act in your best interest. This standard of service and care clearly differentiates fiduciaries from other, potentially less trustworthy, financial advisors.

Perhaps, you know of a well-respected fiduciary advisor in your area. If not, rest assured, there is no shortage of competent and empathetic professionals in the market. With a little research, you can pinpoint a few to meet with and evaluate rather easily.

To facilitate your search, visit the CFP Board, a non-profit organization that sets and enforces standards for the highly respected Certified Financial Planner (CFP) certification. All CFPs are committed to putting your interests first. Moreover, they have undergone a robust educational program designed to help position you for a more secure future.

I Inherited a Large Sum of Money

Getting financial advice can help if you receive a large amount of money

An opportune time to consult with a financial advisor is following the inheritance of a large sum of money. An influx of money from a deceased loved one is an incredible blessing. However, it can be challenging and stressful, especially if you lack financial management skills and investing experience. The last thing you want to do is squander the inheritance or miss an opportunity to grow the funds in a risk-aware, future-focused fashion.

To mitigate your downside, you may want to place a majority of the funds under the advisory of a skilled professional. For instance, let's assume your inheritance totals $500,000.

A prudent move could entail placing 90 percent of it, $450,000, with an investment advisor. He or she can holistically assess your circumstances. Then, work with you to implement a well-diversified portfolio that offers the optimal mix of growth, income and capital preservation potential. This would leave $50,000 for near-term spending needs and shorter-horizon investing, which could provide a great opportunity for you to prudently learn and grow.

I'm Undergoing a Major Life Change

Like an inheritance, any major life change can be the impetus for getting financial advice. This includes things like starting a family, planning a child's college education, selling a business, forging a mid-life career change, entertaining a lump-sum offer on a pension or filing for a divorce.

If these circumstances, your future can seem highly uncertain, which can lead to emotional distress, strained relationships and poor decisions. None of this is good.

Fortunately, a good financial advisor can help you make sense of the details, foster a sense of stability and help you chart a practical course for the future. Thoughtful, unbiased advice can be invaluable, especially if you are not adept at financial management.

I Want to Accumulate Wealth in a Hands-off Manner

If you are on a long road to retirement and desire to accumulate wealth, but you do not want to directly manage your investments, working with a financial advisor is a sensible strategy. You will have to pay an advisory fee, but given your long investing horizon, the returns you'll earn are likely to far exceed the cost.

That said, always be sure to work with an advisor that charges an economical fee. Usually, this will take the form of a "fee-only arrangement" that's levied as a percentage of the assets under advisory. As a general rule-of-thumb, you can anticipate an advisory fee of 1.0 percent on assets totaling less than $1 million, but you should demand an increasingly favorable rate as your stock portfolio grows.

The most competitive advisors maintain fee schedules that start below the 1.0 percent standard. Some have even implemented gain-sharing structures, whereby their compensation is partially tied to your financial success. This "skin-in-game" approach is rare, but it has the potential to become more prevalent.

In some instances, a flat-dollar, piecemeal charge for discrete project work can be sensible. Regardless of the circumstances, be highly skeptical of any commission-based arrangements. These are not characteristic of fiduciary advisors and are prone to conflicts of interest.

Does your advisor care?

Beyond the fee structure, be sure to consider the demeanor of a potential advisor. The best advisors are patient and empathetic with a bent for client education. They exude passion and are truly concerned about their clients' financial well-being. All of this may seem subjective, but, when coupled with objective assessment, "going with your gut" can serve you well.

All things considered, a skilled and economically-priced advisor can be highly advantageous for a hands-off individual. He or she can help you establish a comprehensive financial plan that reflects consideration for your current financial condition and future retirement needs.

The advisor can also help you formulate an investment strategy that appropriately reflects your tolerance for risk, which is largely determined by your investment horizon, liquidity needs, tax position and unique legal characteristics.

My Retirement Is Drawing Near

While connecting with a financial advisor early in your career can be a smart, hands-off way to accumulate wealth, getting financial advice is often essential as you approach retirement. Very few people have the skills, probabilistic modeling tools, and intricate understanding of our ever-changing legislative landscape to effectively plan for retirement. An advisor can bring all of the relevant variables into focus, clearly explain how it all fits together, and help optimize decisions regarding your investment selections/transitions, Social Security elections and retirement account distributions.

People Depend on Me

Regardless of your age and runway to retirement, if you have people that depend on you, procuring a financial advisor is always worth consideration. A fiduciary advisor can help you formulate a plan to ensure your dependents are taken care of - if something tragic were to happen to you.

Generally, this entails assessing your risk exposures, evaluating the amount of wealth you've accumulated and structuring a robust insurance plan to mitigate potential shortfalls. In many cases, it also involves refining your long-term investment strategy and addressing a host of estate planning matters.

What Qualifications Should Your Advisor Have?

A financial advisor helps people plan their financial futures. His or her focus is fairly broad and encompasses planning for a myriad of major life events, including retirement.

The best advisors (generally, CFPs) will also offer comprehensive guidance around navigating the complexities associated with taxes, investment management, estate planning, and insurance.

However, they may need to enlist the assistance of subject matter experts. This includes certified public accountants (CPAs), chartered financial analysts (CFAs), attorneys and insurance agents.

Regardless of the extensiveness of an advisor's credentials, certifications do not guarantee effectiveness. You should only work with someone that exhibits passion, while making you feel completely understood, well-informed and confident.

Ultimately, you need to feel great about anyone that you entrust with your money. You've worked way too hard to accumulate your wealth. You need to be just as diligent about selecting a winning advisor.


Sound financial management is critical for everyone. It entails overseeing day-to-day cash flows, saving excess funds and investing for the future. It's accomplished via an assortment of interdependent practices and considerations, which include budgeting, banking and retirement planning.

For most people, handling these activities can be very difficult. For some, it's simply not feasible. They lack the skills and/or time to properly manage their finances, and they require expert guidance and ongoing assistance. This is when getting financial advice from a skilled advisor can be highly beneficial.

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