Do I Need a Financial Advisor?

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You might need a financial advisor if you’ve got a healthy chunk of money to invest, want a solid retirement plan, need tax help or would like guidance on how to manage your finances in the best possible way. 

Personal finance encompasses a lot of money topics. If you’re just starting out, it can be difficult to know where to begin.

That’s where personal financial advisors can really shine. Whether it’s learning how to build wealth or getting tax advice, a fiscal expert can set you up for a healthy retirement and even help you out of some sticky situations. 

The main dilemma is deciding when to reach out for expert advice. In this article, we’ll be covering that, plus a whole lot more. 

What Is a Financial Advisor? 

A financial professional is typically someone who can help you with anything related to your finances and how to manage your money. 

This guidance includes: 

  • Evaluating your spending habits
  • Determining how much you should be saving
  • Filing complicated tax returns
  • Forming a successful debt payoff plan
  • Creating good investment strategies
  • Making sure you have a solid retirement plan

By definition, “financial advisor” is an umbrella term for a huge variety of experts. You’ll need to specify what type of help you need in order to find the correct money advisor.   

Common financial advisor specialties include:

  • Certified Financial Planner (CFP): An expert who helps with most of your money management needs. To become a CFP, you must pass exams, have several years of experience, and abide by strict ethical standards. 
  • Certified Public Accountant (CPA): A tax expert who can help you file complicated tax returns and recommend ways to lower your taxes. Some assist with business bookkeeping as well. 
  • Investment Advisor Representative (IAR): An investment expert who can help with investing for wealth building and retirement planning. 

What Does a Financial Advisor Do? 

A financial advisor will give you sound advice based on your unique financial situation. The exact services provided will depend on what type of specialty they have. 

In general, an advisor will ask questions to gather specifics about your financial situation. Be prepared to share your income, expenses, how you budget, what your savings and retirement goals are, etc. 

Depending on what you need and the help you’re looking for, financial planners can draw up a customized game plan to get you where you’d like to be in terms of your money health.

When Do I Need a Financial Advisor? 

This is the million-dollar question. Many people wonder if they have to be rich or ready to invest a ton of money before hiring a financial advisor. 

The answer is yes — and no. 

Although you don’t have to be rich for a CFP (certified financial planner) to work with you, be aware that they can be costly. In another section of this article, we’ll break down the average fees.

If you need an investment specialist, hiring one makes sense only if you have a decent chunk of money to invest. 

That’s because their fee is usually a percentage of the money they’ll be managing for you. If you’ve got only $1,000, it’s probably not the time to hire someone. Their fee won’t even pay for their gas.

On the other hand, some specialists are worth their weight in gold and can work with most budgets. 

Why You May Not Need a Financial Advisor

You may be fairly experienced with money matters — or at least willing to learn the ins and outs of more complicated topics. If so, you may not need a financial advisor. 

There’s no set rule about anyone “needing” an expert to weigh in on their finances. 

The decision is ultimately yours to make. After weighing the benefits of hiring help and evaluating your confidence level in money management, you may not feel the need for expert advice right now. 

However, if you find yourself accumulating wealth (and we hope you do!) or losing money in the stock market, you can always change your mind. 

And whether you decide to hire an advisor or not, it’s worth educating yourself about your money. We’ve put together a new course, Financial Freedom in Uncertain Times, that can help you prepare yourself for the future.

When you sign up, you’ll receive detailed lessons, exercises, and interviews to get you ready for whatever comes next.

What Type of Financial Advisor Do I Need? 

Financial advisors come in nearly every variety. The expertise that’s right for you will relate directly to the part of your finances that needs the most guidance. 

  • Are you trying to plan for retirement? You’ll want a retirement advisor. 
  • Have taxes got you stumped, or are you trying to find more tax breaks? A Certified Public Accountant will know exactly how to assist.  
  • Do you need budgeting help or guidance for important financial decisions? You may do well with a financial counselor. 
  • Will you be investing money in the stock market or a mutual fund to grow wealth? An investment advisor representative could be the perfect fit.  

With more than 100 different types of credentials, choosing an expert for help isn’t always easy. The type of advisor you choose will depend on a few primary things:

  • The specific financial area you need help with
  • How much money you have to invest
  • What you can afford to pay for an advisor   

How Much Does a Personal Financial Advisor Cost?

The cost of hiring a financial advisor depends on which specialty you choose. 

Certified Financial Planners can be quite pricey, but it’s possible to find one who charges a flat or hourly fee. The flat-fee range could be from $1,500 to $2,000-plus to do some financial planning with you. And hourly charges can range from $200 to $400. 

A CPA’s (aka tax specialist’s) fees vary quite a bit. If you shop around, you can find one to fit your budget. The average hourly cost is $50 per hour.

Tax filing costs depend on the complexity of your return. You might be looking at a range of $125 to over $400. 

For those with very tight budgets, a financial counselor may be the perfect answer. They can help you navigate things like student loan debt, setting up a budget, hitting savings goals, finding affordable housing, and a lot more. 

These specialists don’t give investment advice (unless they’re certified in that field). However, an accredited counselor can assist with a specific financial goal as well as most other money questions you have. And for a limited time, you may find free financial counseling due to Covid. 

How Does a Financial Advisor Get Paid? 

Financial advisors are typically paid in the following ways:

  • You might be charged a flat fee per project, such as drawing up a financial plan for your goals. 
  • Some accountants, planners, and specialists are paid by the hour.  
  • Investment specialists mostly charge a percentage of the money they’re investing and managing on your behalf.
  • Some advisors charge fees that are paid on a monthly basis to retain their services. 

Benefits of Hiring a Financial Advisor

If you have the money to spend on expert finance advice, there are many benefits to be had. Nothing beats getting counsel that’s tailored to your specific needs. 

  • You can save money on taxes and/or reduce the stress of a small business by having a CPA do your tax filing and bookkeeping. 
  • A retirement advisor can devise a successful retirement plan or an early exit from the workforce. 
  • Estate planning and wealth management are also perks of being the client of an expert. 
  • Creating a budget to manage your debt, pay off loans, and improve your financial health could be worth every penny you spend on a finance counselor. 

How to Find a Financial Advisor

When it comes to finding a financial advisor, you’ll need to decide if you’re most comfortable meeting face-to-face or if virtual assistance is preferable. 

In-person financial advice  

For in-person local help, ask your friends and neighbors whom they recommend. Some people have been working with experts for years and can steer you in the right direction.

You can also find an expert by checking out online reviews. I actually love using Yelp to find great service providers in my area. Reviewers don’t hesitate to give you the lowdown on what they do and don’t like.  

Another good way to find a qualified advisor is by using an online service that helps match you with a local expert in the field you’re looking for. 

Virtual financial advisor 

An online advisor may fit your needs just as well as a local expert. They offer the same services and may be more flexible with scheduling as well as their fees. 

If you’re comfortable receiving financial advice over Zoom, with a phone call, online — or a combination — you won’t be limited by a physical location when looking for a qualified advisor. 

With today’s focus on virtual services, and with more professionals working remotely than ever before, you’ll find many experts to work with. And you might even save some cash.

As always, shop around, ask questions about qualifications, and find out fees ahead of time. Many virtual advisors offer a free initial consultation. 

Robo Advisors vs. Human Advisors 

So far we’ve covered a lot of information about seeking financial advice from real humans. But there’s another option called a robo advisor. It’s pretty much how it sounds — automated.  

When you use a robo advisor, you won’t really talk to a robot (I’m sure that day is coming, though). Instead, you’ll input a bunch of information about your investing goals, and a fancy algorithm will help build and manage a portfolio for you. 

This can be an inexpensive option if you just want to create a balanced investment strategy. Some robo advisors don’t even require minimum investments or charge fees. If this sounds like what you need, there are a handful of good ones out there.

Robo advisors are good for beginning investors, but they’re not a very good fit for those who need advice on other financial matters. If you need sound budgeting, saving, or retirement guidance, it’s better to choose an advisor with a mouth. 


Here are the most frequently asked questions about hiring a financial advisor.

Should I use a financial advisor or do it myself?

To answer this question, you’ll have to evaluate your money situation. If you need tax help, don’t go it alone. If you’re already finance-savvy and are willing to learn more, a financial advisor may not be necessary at this point. 

Keep in mind: A professional can potentially save you time and money in the long run. They can also help grow your wealth if you have no clue about investing. Only you can decide if you’re ready to put down some cash for that expert advice. 

Do financial advisors make you money?

Investment advisors would like nothing more than to see you make money. When you come out ahead, they do too. But they make no guarantees that you’ll make money. They simply can’t predict the markets. 

Other advisors are there to help with taxes and budgets and stuff. Can they save you money? Absolutely. Will you have their word that you’ll make money? Nope. 

Is it worth paying for a financial advisor?

If you’re drowning in debt, don’t have a plan for your future, or have received yet another letter from the IRS, it may be wise to cough up some cash for help. 

Hiring a financial advisor doesn’t have to break the bank. As we’ve discussed, a financial counselor isn’t as costly as a planner. And they can be a lifesaver when it comes to figuring out those student loans or creating an effective budget. 

On the other hand, if you’ve got the funds to spring for a sit-down with a certified financial planner to hammer out a blueprint for your future, you may be thanking yourself 15 years from now when you’re living the life of an early retiree.

The Bottom Line

We’ve covered a lot of ground about finance experts, what they do, and if you should hire one. Everyone’s financial health, knowledge, and experience is different. 

You may not ever need expert advice. But if you find yourself in a real money bind, it’s nice to know there’s a wide variety of professionals who can help. 

As always, I’ll be rooting for you on your journey to financial freedom. 

And if you need a little more guidance along the way, you might want to check out the new course my team has put together. It will show you how to protect your assets — and even build your wealth — during times of financial uncertainty. 

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