What Does a Financial Advisor Do and Why It May Be Time to See One

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Less than half of 1000 Americans surveyed said they felt confident about their 401(k)s.

Feeling confident about finances is not easy for many, which many enlist the help of a financial advisor.

Exactly what does a financial advisor do and do you need one?

Read on to get the answer to this question.

What is a Financial Advisor?

Although it seems like being a financial advisor is an official title, the term is not a name or a degree. In fact, a financial advisor is simply a person who provides financial services to clients.

The services are not limited to a specific financial area. A financial advisor can be anyone from a certified public accountant (CPA), personal financial specialist (PFS), registered investment advisor (RIA), certified financial planner (CFP), and chartered financial analyst.

Many financial advisors take on one or more of these roles. For example, some financial advisors have a CPA license or a CFA.

When Do You Need an Advisor

You may be wondering when it makes sense to get a financial planner. If you’re in doubt, you should consider getting a financial advisor under the following circumstances:

Planning for Retirement

Retirement is something many people look forward to as they begin to get closer to retirement age. However, not everyone approaching retirement age is ready to do so.

In fact, 78% of Americans mentioned they’re concerned over their retirement savings.

Getting a financial planner is something to seriously consider if you want to prepare yourself for retirement.

Ask yourself the following questions to determine if a financial advisor is right for you. Are you financially ready to retire?  How will you go about withdrawing money out of your retirement accounts?

If you have many unanswered questions about your finances at retirement, it’s time to consult a financial advisor.

Starting a Family

Starting a family is an exciting time for many, however, it’s important to be aware of whether or not you’re financially ready.

Most people who start a family have to think about the following buying a house, life and health insurance for the entire family, college savings, and more. Having so many financial responsibilities can be a lot for a young family.

A financial advisor can help those who want to start a family make all of their responsibilities more manageable.

You Earn A Lot if Money

High earners might not feel like they need a financial advisor.

However, If you earn a lot of money, it might be easy to get carried away and not know how to manage your finances. A financial advisor can be a solution for high earners.

Financial advisors can give high earners tools to be more financially responsible, make the most out of tax breaks, and other money management strategies.

Those Who are Self-Employed

If you’re self-employed, you might not have the same benefits as those who work for a private company.

Financial advisors know self-employed individuals have different financial needs and a different set of questions.

If you’re self-employed, a financial advisor can help you sort things such as taxes, retirement savings, and even employee benefits.

You can share with a financial advisor your goals and expectations for your self-employed business and they can help you make it happen.

You Have a Big Event Coming Up

Sometimes people might be doing really well with their finances until it’s time to save money for a big life even. Such life events can be paying for a wedding, saving for the deposit of a house, paying down a large debt, or taking care of medical bills.

Sometimes a challenging financial situation might feel impossible. A financial advisor will be an excellent resource if you need to save for a big life event.

Your Net Worth is High

Individuals with a high-net-worth tend to have different financial issues than other people. A high-net-worth means dealing with multiple accounts, estate and trust planning, tax issues, and much more.

A financial advisor can help you handle large amounts of money so you feel more organized.

When Do You Not Need an Advisor

Although the idea of a financial advisor to make the most of your money might seem like a good idea, there are certain situations when you don’t need one.

Simple Situation

If you’re a person who is only concerned about how to set up a 401k or saving for the future, you might not need a financial planner as much as you might think.

You can get a lot accomplished by yourself if you only do a little bit of research.

For example, If you want to build a hefty 401k, you should take advantage of all of the resources your job has to offer.

You might also be able to build an emergency fund if you out a little work and research into it.

You Have Consumer Debt

Those who are trying to pay off credit card and other types of consumer debt might not benefit from a financial advisor as much as they may think.

If their goal is to get out of debt, they should rather get a credit counselor to consolidate their debts.

What Does a Financial Advisor Do For You

A certified financial advisor will also be a third party that will help you stay on track with your financial plan.

They do more than keep you on track. A financial advisor can also help with estate planning, rebalancing investments, tax planning, and spending strategies.

Financial advisors also help those too emotionally invested keep their emotions in check. Even when you feel like you’re losing money, a financial advisor will keep a clear head and help you make your next smart financial move,

What Does a Financial Advisor Do: The Bottom Line

What does a financial advisor do? Now that you know the answer to this question, it’s time you decide whether or not getting a financial advisor is right for you.

Are you wondering if you should hire a life coach for your personal and financial goals? Check out this article.

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