Should You Hire a Financial Adviser?
As you start to build up your net worth, the question of whether or not you should hire a financial adviser becomes more important. However, the answer is not a simple yes or no. Some people do quite well without a financial adviser, some people need one, and on rare occasions, some wish they never had one. Even though I’m a financial adviser, I don’t believe that everyone should hire a financial adviser.
Photo by Miguel Virkkunen Carvalho via Flickr
In fact, I don’t think anyone should hire a financial adviser unless and until they can answer two questions:
- 1. What do you want to get out of the relationship?
- 2. Are you ready to take advice?
What do you want to get out of the relationship?
Let’s tackle the first question, what do you really want out of your relationship with a financial adviser?
This may seem like a really basic question but I think you’ll see that it really isn’t. For example, some people hire financial advisers because they want better investment results. Fair enough…but let’s look at this issue a bit more carefully.
Do you want an adviser who will beat the market every year?
If this is your real motivation, forget about it. It’s impossible. No financial adviser can beat the market year in year out. If they have a great streak for a number of years, chances are they’ll disappoint you sooner or later. And you’ll bail on them exactly when that happens. There are investment strategies that work, but nothing works all the time.
Don’t hire an adviser for above-market performance. It’s not something you can hang your hat on.
Are you looking to hire an adviser because you need a financial plan?
If so, you may not need a money manager. You should just hire someone who can put a plan together for you. A plan you’ll understand and more important, one you’ll implement.
If you need insurance, you can get that online much cheaper than through a planner or an insurance agent.
Have I discouraged you from hiring a financial adviser?
I hope not.
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