These days, it seems everyone’s got their own take on financial advice. From blogs to friends and family, it can be hard to decide what advice to take. If you feel like you need assistance managing your investments, you may need to hire a financial advisor.
So, how do you determine if a financial advisor is right for you?
Understand Your Needs
The first step in finding out whether you need to hire a financial advisor is to figure out your financial needs.
If you’re looking to open your first IRA, you can typically opt for an automated service to manage your portfolio through a computer-generated algorithm. These services charge a relatively small fee, usually between 0.25% and 0.90% of your account’s balance. However, some people may need more hands-on help.
Personal Portfolio Guidance
If your financial goals are a little more complicated, consider meeting one-on-one with an advisor.
While the initial consultation is typically free, advisors can either charge by the hour or by the project. Hourly fees range anywhere from $200 to $400 while projects can range from $1,000 to $3,000. You’ll definitely want to ask if your prospective financial advisor is a fiduciary, meaning they have to put your needs first.
The Trust Factor
Finding a financial advisor you trust is the most important part of investing in this service. Before sealing the deal, you’ll want to get all of your financial goals and information out in the open. This includes discussing your short and long-term goals, current budget, cash flow, debts, risk tolerance, and more.
Don’t be shy when talking about these topics, because the more you give your financial advisor the more they will be able to help you. However, if you can’t afford the fees, don’t invest in the service. You should only hire a financial advisor if you absolutely need to. If you can’t quite decide, meet with a few professionals for a free consultation. This will give you a feel for the financial advisor-client relationship, and whether hiring them is the right move.