Should I Have a Financial Advisor or Planner?

Hiring a financial advisor or planner is a personal decision based on several factors. First, however, it’s worth taking a moment to differentiate between financial advisors and financial planners. A registered investment advisor (RIA) will focus more directly on managing an investment portfolio, while a certified financial planner (CFP) plays a broader role that includes other types of planning such as retirement and estate planning.

Before making a decision, determine whether or not you have the time to adequately study the numerous investment possibilities. If you are looking to invest wisely, it will mean reading financial papers and magazines and going on the Internet to learn about various investments. This takes time, and there is usually a learning curve.

Other key factors in your decision to get professional financial help or not are your current financial situation and your future goals. If you are comfortably setting money aside in a 401(k) and using the bulk of your current income to support yourself or your family, then there may not be much money left over to invest. This, however, does not mean you won’t have a plan for sending your children to college, for instance. Learning how to plan for and save for major events is one of the reasons why people seek out financial advice. If, for example, you are ten years away from retiring and hoping to make the money in your retirement account last, you might want to set up a plan with a professional.

Many people find that their accountant serves as a guide to the basics of managing their assets and, in some cases, making investments. If such a system has been working, you need not change. However, while many accountants do serve as financial advisors or planners, they are not necessarily one in the same.

The short answer, therefore, as to whether or not you need a financial advisor or planner is simply "It depends." There are factors to consider, including your personality. Some people are far more comfortable taking matters into their own hands. Others want the comfort and expertise of someone with experience.

If you do elect to seek financial assistance, meet with a few people before deciding on whom you will hire. Get information on their backgrounds, check credentials (verify them with the appropriate state offices) and try to get a recommendation. You are always better off if you can find a professional through the recommendation of someone you know. Make sure an advisor or planner explains the pros and cons, including risks, of each investment option and why it is or is not right for you.

You should feel comfortable with your financial advisor or planner. This is an important relationship, one that involves a great deal of trust. After all, you should be providing full disclosure of your financial situation to this individual. If something does not feel right, just walk away. Remember, it is your money.