Whether your financial goals are big or small, careful planning and strategizing are necessary to eventually accomplish all of them. This can be easier said than done, which is why you might consider hiring a financial advisor. Turning to a professional can help you meet your financial goals. Whether you’re starting a family, approaching retirement, or planning to hit another financial milestone, an advisor can help forge a personalized plan designed to meet your money milestones.
There are different types of financial advisors and costs associated with an advisor’s help. It’s important to understand your options and your financial needs to make sure you’re choosing the right financial advisor that’s right for you and your budget.
When To Hire A Financial Advisor
Financial advisors are a trusted fiduciary service where professionals are obligated to work according to their client’s best interest. There are a number of reasons why it might be a good time to hire a financial advisor.
The most popular reason is because you’re in need of help planning your future. This can be at any point in your life where you’ve decided it’s time to think ahead and prepare for your future.
Some financial goals you might want professional help planning for include:
- Paying off your student loans or other types of debt
- Saving for retirement
- Buying a house
- Child education fund
- Emergency funds
If you have the funds, it could be worthwhile to seek help from a financial advisor in times of economic uncertainty. They can help formulate a plan to minimize the impact on your finances and assets. Your financial plan can be monitored and updated according to the economy if you choose to pay for ongoing service.
Maybe you’re currently self employed, a small business owner, or are earning enough money and have options on what you can do with it. Hiring a financial advisor can guide you through the financial planning. They could even be helpful if you’re a newbie to the financial world and don’t know how to handle your money. This service could help you get on the right track with your finances by not only planning your future, but teaching you money basics along the way.
Types Of Financial Advisors
Choosing a financial advisor is an investment. That’s why it’s important to evaluate your options and understand the types of advisors that are available to you. There are three main types of financial advisors to consider.
Traditional Financial Advisors
Having a traditional financial advisor involves having them handle your financial goals. Their job titles and expertise could vary, and you’ll typically meet with them in-person at an office to become a client.
Robo-Advisors
If you’re an online banker or prefer to handle finances online, a robo-advisor might make sense for you. A computer algorithm builds your portfolio based on your answers to questions, financial goals and risk tolerance. Robo-advisors generally cost less money than traditional advisors.
Online Financial Planning Services
An online financial planning service gives you the best of both worlds of traditional and digital advisors. It allows you to build a financial plan online, and also get matched with a human advisor you can consult with possible questions.
Costs Of Financial Advisors
There are different ways a financial advisor might charge you for their services. The fee could be a base rate or it could depend on your personal assets and required services.
The cost of service will generally include consultation, a comprehensive financial plan and fees to receive ongoing service. Here are the average costs for traditional financial advisors, based on different pricing points.
- Percentage of assets under management: One percent for a traditional advisor
- Hourly charges: $200 to $400
- Fixed fees: $2,000 to $7,500
- Per-plan fee: $1,000 to $3,000
For more context regarding an assets under management fee (AUM), here is an example of a customer requiring services for a one million dollar account. On average, a financial advisor would charge a 1.02 percent AUM and leave the customer paying around $10,200 for the service.
In addition to traditional services, you could also pay for robo-advisors or online financial services. The prices will vary from service to service.
Here are the average costs for those two services.
- Robo-advisors: 0.25 to 0.50 percent assets under management fee
- Online financial planning services: 0.30 to 0.89 percent assets under management fee or annual fee ranging from $0400 to several thousand dollars
Commissions or performance-based fees are other ways you could be charged. The price could be based on one of these factors or a combination of them. When looking for a financial advisor, compare your options and find out which offers you the best service for your dollar.
Search Online For Financial Advisor Services
There are a lot of benefits to hiring a financial advisor. They can help you plan for any stage of life and give advice according to your best interests. You can have a professional advise you on money without being emotionally involved, and suggest ways to adjust your plans based on economic trends.
Before signing up with the first financial advisor you come across, you should evaluate your options. Make sure to think about what your financial goals involve. This will not only determine the type of advisor you sign up for, but how much money you could end up paying for the service.
Consider starting online if you feel that you have a good understanding of your personal finances. You can use robo-advisor and use your judgement. If you need more assistance and prefer to have a professional help you out, then a traditional or online financial planning service might make more sense.
You can easily find online financial advisors or offices with a quick search. Compare their rates and the services they offer to make sure you’re investing in a service that’s right for you.