Why and When do you need a Financial Advisor?

June 15, 2021

Why and When do You Need a Financial Advisor? 

Whether you're considering hiring a financial advisor in Dallas or any other city in Texas, you'll want clarity on why and when you need a financial advisor. Simply put, a financial advisor accesses your finances, then creates a plan to help you reach your goals. Some will also provide investment management. If you've been thinking about your personal finances, you've probably done some poking around on the internet. Maybe you've even gotten serious and read some books, regularly keep up with the markets. But the question is - can you do everything a financial advisor can do for you? For some, the answer is yes, but for most of us, we don't have the time or training. 

What do Financial Advisors Do? 

The real value a financial advisor brings is their ability to personalize a plan for you and your needs. They help you design a plan to meet your current needs while putting you on a course to meet your long-term goals. They can help you reduce spending, pay off debt, and save and build wealth for the future. Some may have specialties in specific areas like taxes or investments. A certified financial planner is a general practitioner that can offer advice on everything from budgeting and investing to insurance and retirement strategies. 

When do You Need a Financial Advisor? 

The truth is as soon as you start making money, you can benefit from the services of a financial advisor. They exist to help you manage and grow your finances. In general, the more complex your financial situation, the more you can benefit from a financial advisor. Perhaps the greatest value a financial advisor brings is objectivity. They do not have an emotional stake in your finances, they are able to just look at the numbers and design a logical plan that will work if you stick to it. Financial advisors are especially helpful when you're facing big life changes like marriage, divorce, or an inheritance.   

Working with a Financial Advisor 

Think of your initial meeting with a potential financial advisor like a first date. It’s a chance to get to know one another and see if you mesh on a personal and philosophical level. You should also find out everything you can about how they operate, including fees, their process, and communication practices. During your initial, be prepared to answer the following questions to get the most out of your time. 

  • What are your short and long-term financial priorities? 
  • How much money comes in and goes out? 
  • What do you own (assets), and what do you owe (debt)? 
  • What is your risk tolerance? How much of your portfolio should be in stock versus other investments like bonds? 

Is a Traditional Financial Advisor Right for You? 

When it comes to finding the right financial advisor in Dallas, you’ll have a lot of options. A good financial advisor can provide holistic, one-on-one advice for the most complex financial situations. Fee-only advisors will only charge you by the hour or task or just have a flat annual fee.  Others charge by the size of your investment portfolio, which is called assets under management fee. This is typically 1% of your portfolio balance each year. 

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