Do You Need a Financial Advisor?

Whether you are a first time investor or an experienced hand, you may benefit by working with a professional financial planner or investment advisor. Selecting an advisor who is knowledgeable about the specific issues you want to discuss and who is also affordable and trustworthy is a lot tougher than choosing a dentist or plumber. The consequences of making a poor selection can be even more costly.

If you live in a major metropolitan area, you'll have thousands of financial professionals who are eager to help you. Even in smaller cities and towns, you're likely to have multiple options - traditional stockbrokers affiliated with national investment companies; independent financial planners; or employees of banks, law firms and accounting firms. You may work exclusively with one person or with a team.

As far as fees are concerned, you can expect to pay anywhere from $100 to $300 an hour, or an annual fee of 1% to 2% of your financial assets, which can add up to thousands of dollars a year. You may want to pay someone a one-time fee to help solve a single unusual problem or you may prefer an ongoing arrangement that involves all areas of your family's personal finances, starting with a detailed plan for the future and perhaps authorizing the advisor to take custody of your investments and decide how and where to invest the money.

Before you start looking for an advisor, ask yourself what you need in the way of professional advice. If you're fairly confident in your ability to make financial decisions or if your questions are relatively simple, you may need only to consult with your neighborhood banker or your employer's human resources department. The following situations often call for an outside professional:

You've changed jobs and want guidance on how to transfer your retirement savings from your old employer's plan to your new employer.
You're getting married and you want to make sure that you and your new spouse are both on the same page about how to mesh your savings, investments, debts, and other obligations.
A family member has died and left you an inheritance. You need direction on how to invest it.
You've lost serious money on the investments in your retirement accounts and feel you need advice on how to make better choices.
You're thinking of buying a new house and wonder if it makes sense to keep the old one and rent it out as an investment.
You want to learn more about how the stock market works and to reorganize your investments so that you're in a better position to save for your children's education or your retirement.