Who to look for and when to do it.
By Jenny Hoff, Photos by Amy Hirschi
Let’s face it. Not everyone has time to become a financial expert and do the research needed to make good decisions with their financial planning, investments and budgets. A financial advisor can help. You don’t need to be drowning in cash to hire a financial advisor. But you should have some sort of savings or assets to make it worth your while.
A great time to hire a financial planner is when you have a bit of a savings and don’t know how to invest it, or you’re at a crossroads financially. You may be considering a career switch and want to plan a budget accordingly. Perhaps you’re planning to have children and want to get your current assets invested. Or you’re engaged and want to make sure you and your partner have a financial plan going forward. You may even just be a few years into your professional life and want to make sure you are on the right track to meet your goals. It’s never too early or too late to get expert financial advice. Typically people with financial planners earn more through investments than those who go it alone.
What You Should Look For
Financial planning is life planning. A good financial planner will ask you a series of in-depth questions to understand your risk tolerance, your goals for the future, your plans if you want to have children, how much you expect to have in retirement, which values dictate your decisions and more. It’s an opportunity to do more than discuss your money; it’s a chance to think about what you want your life to be like in five, 10 and 20 years.
But not all financial advisors operate or charge in a similar way. The best kind of financial advisor is a fiduciary, an advisor sworn to act and advise in your best interest, not in the best interest of their bottom line. It’s also worth considering hiring an advisor who is paid by the hour rather than one who takes a cut from your earnings. While an hourly rate of $150 to $300 might seem expensive, in the long run it could save you a lot of money compared to a fee of, say, 1% taken from your earnings every year. When you pay hourly, you know they are advising based on the best investments for your situation (rather than those who pay managers a higher fee).
Where to Find a Fiduciary
When you start your search for a fiduciary, it helps to ask for referrals from friends and family. If you don’t know anyone who has a financial advisor, then use online reviews as a starting point. But beware; some firms have been known to hire people to leave reviews on Google and Yelp in order to up their rankings. Going through a reputable firm, like the Kinder Institute, is a great way to ensure the advisor you hire follows a strict set of rules. Or if you’re a Dave Ramsay fan, ramseysolutions.com has a list of trusted advisors.
Before you hire anyone, however, you should do your research to make sure they are a fiduciary. Ask in-depth questions about their pricing and make sure their strategies align with your values as well. Don’t be afraid to interview multiple people to find the right fit for you. After doctors, financial advisors are the professionals who will most intimately be connected with your life and financial health. So you should make sure you trust and like the person you hire.