Need a financial adviser? 5 situations where it’s likely worth it

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You can handle many financial tasks on your own, especially if you take the time to read up on the best course of action. For example, by reading how to select investments in a 401(k), you can better understand the key considerations in managing your employer-sponsored retirement plan. But more specialized, complex or individualized tasks may require you to consult a financial adviser.

Here’s how to know if you need to call in an expert to help get your financial affairs in order and how to select a financial adviser who’s going to work in your best interest.

How to know if you need a financial adviser

If you’re looking for investment advice, a human financial adviser can help you.  A robo-adviser is also a great option for more routine investing tasks — and usually cheaper. But where human advisers truly excel is in helping with your specific financial needs and sometimes even helping you figure out what they are.

“Sometimes our minds and hearts may get in the way of making difficult decisions,” says Chris Briscoe, CFP, vice president and wealth adviser at Girard in the Philadelphia area. “Financial advisers can provide that unbiased view and help take the emotion out of it. They take a step back and look at everything objectively to help you determine the best choice to make.”

So here are five situations where you’ll likely need the expert assistance of a financial adviser.

1. You have no interest in doing it

It’s hard to do something when you’re not motivated to do it, and it’s hard to get motivated when you have no interest in the task at hand.

“Many individuals are great at what they do professionally but don’t have time or interest in also managing the family finances, as this can create stress that feels like having a second job,” says Michael DiNuzzo, CFP, financial adviser at DiNuzzo Wealth Management in Pittsburgh.

If you simply have no interest in learning about your finances, you need an adviser.

2. You lack a comprehensive view of your finances

If you don’t know your financial situation, it can be valuable to call in expert help to help you figure out where you’re at, where your money’s going and where it needs to go to meet your financial needs.

DiNuzzo suggests that if you don’t have a solid view of your own financial position or a good idea of your current spending, it’s a sign that you need an adviser.

A good financial adviser, he says, can help formulate goals for clients and then show “where they are in current relationship to them, and what strategies may apply to close the gap in a way that is easy to understand.” They do this based on knowledge of their clients’ finances and “a deep personal relationship and understanding of what matters most to them.”

3. You’re not sure how you’re going to retire

If you’re not sure how you’re going to fund your retirement – maybe even terrified that you won’t be able to afford it – you need to speak with a financial adviser, perhaps quickly.

“Individuals retire once in their lives, but some financial advisers have helped assist hundreds or even thousands of people across the retirement finish line,” says DiNuzzo.

It’s likely that an experienced financial adviser has dealt with your exact issues before and knows how to solve them so that you can reach your financial goals. For instance, an adviser can help get your 401(k) and IRA in order so that you can maximize your retirement.

4. You’re missing a detailed estate plan

While robo-advisers may be effective at some tasks, human advisers can be necessary for more complex tasks that have the potential to cost you a lot of money if not done correctly. For example, legal issues surrounding estate planning (think wills and trusts) could end up costing you or your heirs a lot of money that you could have saved with a good adviser.

It’s also important to understand the advantages of wills and trusts, particularly in the era of the coronavirus, and have those documents established before they’re truly needed.

5. You’re thinking about filing for Social Security

When you file for Social Security has a tremendous effect on how much you can collect from the program. And there are ways to increase your benefits without having to earn a higher salary.

“Statistically, most Americans leave tens of thousands of dollars behind, resulting from when they decide to file,” says DiNuzzo. “This is a one-time decision that is worth consulting professional advice.”

A good adviser will also be able to minimize your Social Security taxes – maybe even eliminate them – so you maximize the income that goes into your pocket. Even if you don’t hire an adviser on an ongoing basis, it could quickly pay for itself to hire one to navigate Social Security for you.

How to choose a financial adviser

Once you’ve decided you need a financial adviser, it’s time to find one. But the best course of action is not to hire just any adviser, but rather one who is going to work in your best interest.

Look for the following three things as you search for an adviser:

  • Find a fee-only fiduciary. These advisers are paid for by you, so they’re more likely to work in your interest. You pay more upfront, but the decisions are likely to cost you a lot less money than receiving the advice of a conflicted adviser.
  • Check for verified credentials. You want an adviser who’s in good standing with accrediting bodies that granted such credentials as the certified financial planner (CFP) or chartered financial analyst (CFA) designation. Verify an adviser’s cred at the CFA Institute’s site or the CFP Board’s site.
  • Find an adviser who motivates you. A good adviser needs to be able to help you stick to what’s in your long-term best interest, and keep you motivated to follow through on it. That means being by your side during tough times and understanding your needs.

If you’re looking for more details on finding an adviser who’s going to help you achieve your financial goals, see this detailed guide for choosing a financial adviser.

Bottom line

“In the end, it’s about the client and their financial needs,” says Briscoe. “Every client is in a different situation, a different point in his or her life. Advisers are there to help you for your specific situation.”

So find an adviser who helps you achieve your financial goals, not theirs.

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Written by
James Royal
Senior investing and wealth management reporter
Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.
Edited by
Senior wealth editor