Many people often wonder: Is a financial advisor worth it? With an abundance of free advice online, why pay for the help? If you’re unsure whether a financial advisor is for you, here’s how to determine your answer.
If you manage your own money, you are like most other Americans, according to the new CNBC Invest in You survey released Monday. In fact, only 1% of those polled said they use a financial advisor. And when it comes to older Americans nearing retirement, only 52% of pre-retirees and 44% of retirees consult a financial planner or advisor (according to a new report, Understanding and Managing the Risks of Retirement, from the Society of Actuaries).
So how do you know if you are making the right money moves without experienced financial pointers? Consider this: Most Americans don’t know how much money they should be saving and investing each month—and they don’t know how much they should be contributing to their employer-sponsored retirement accounts. Therefore, people need to be honest with themselves if they are interested in managing their money. Ultimately, the only person who can determine whether you need a financial advisor is you.
To Hire a Pro, Or Not to Hire a Pro?
When we make big decisions in life, most of us look for a source of expertise and guidance to help us make thoughtful choices to meet our individual goals and needs. Hiring a financial advisor is one way to build more wealth in retirement. But if there is one universal truth about money, it’s that people think they have a lot more financial expertise than they really do.
For most investors who choose to work with an advisor however, advice is not just about investments. It’s also about helping them build a personalized plan around their full financial picture designed to help them pursue multiple goals, grow wealth, and take care of the people who matter most.
Every investor’s situation is different, so everyone will find different value in an advisor relationship. Generally speaking, a financial advisor will probably be worth it for you if:
- You’re close to retirement.
- Your financial situation is too complex for search engine help.
- You need help with an investment strategy.
- You use emotions in investing decisions.
- You need tax guidance.
- You need advice on estate planning.
A financial advisor may not be worth it for you if:
- You are comfortable making your own investing decisions.
- You’re a long way away from retirement.
- You can manage your portfolio confidently.
- You aren’t interested in complex planning strategies such as tax minimization.
- You have a fool-proof estate plan in place.
Perhaps one of the biggest reasons TO get an advisor from this list, is to build your retirement fund.
Retirement Gains
As mentioned, most Americans are behind when it comes to saving for retirement; which is where a financial advisor can shine through. A recent Vanguard study found that on average, a self-managed $500,000 will grow to $1.69 million in 25 years by following typical savings/investment rules. However, with a financial advisor on board, that same $500,000 would grow to an average of $3.4 million! What’s more, industry studies estimate that professional financial advice can add between 1.5% and 4% to portfolio returns over the long term, depending on the time period and how returns are calculated.
Another big advantage of hiring a financial advisor is that they can help clients navigate the various economic ups and downs on the road to retirement that go beyond just recommending certain investments. This is especially beneficial in times of economic uncertainty and rising interest rates — like now. They can look at your plan objectively, and help you figure out what is working and what may need improvement. Your advisor can also help you stay level-headed when the market experiences volatility, preventing you from buying or selling at the wrong time out of fear or anxiety.
The best advisors understand how people make decisions about their money — not just how markets work — so they can recommend solutions that work for you.
Why Johnson Wealth and Income Management
Are you looking for a way to grow your wealth and build up retirement savings? If so, hiring a financial advisor is a great place to start. The Fiduciary Financial Advisors at Johnson Wealth and Income Management help clients prepare for retirement by helping them navigate the oftentimes complicated world of financial planning and investment management. By working with us, you can rest assured that your money will be invested in ways that are designed to keep up with changes in the economy, as well as your own personal situation.
To summarize, we can help you with your financial planning so you can have peace of mind while pursuing your life goals. We are committed to breaking down the common misconceptions about financial advisors by educating our clients and communities through workshops on topics related to more conservative investment alternatives. We also offer a wealth of services custom-designed to help you get the most from your retirement.
If you want professional guidance to help make the best out of your retirement plan or choose products that will strengthen your investment mix, contact us here today.
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