Finance is not a child’s play. Not everyone is capable of taking the right decisions, and despite reading a lot of books and talking to several people, long term investments could still be Achilles’ Heel for some.
Enter, financial advisor.
Whether you seek the assistance of an independent financial advisor or work with an organization, the real task is finding the right professional – someone who offers sound advice that is worthy of investment, without burning a hole in your pocket. Before hiring a financial advisor, consider the following merits and demerits of your choice.
Advantages of hiring a financial advisor
- A financial advisor has a deeper knowledge of money management than you do. This comes in handy with complicated investments like taxes, retirement planning, or education loans.
- For will and estate planning, the services of a certified financial advisor are crucial. You can figure out your savings strategies, retirement plans, and options. These can only be explained by professionals who have extensive knowledge on the subject.
- When you work with a financial advisor, you save a lot of time. Finance is complicated, and the time you invest in researching can be better utilized in managing portfolios prepared by your advisor. Plus, you get some valuable advice for a little fee that goes a long way in accumulating great returns on your investment.
Disadvantages of hiring a financial advisor
- Financial advisors might not always have your best interest in mind. Some professionals endorse certain services and products in lieu of commission that might not be the best places to invest your money into. This conflict of interest can be avoided by hiring a fee-only advisor.
- If your investment is not that massive, paying the fee of an advisor could be another issue. It could cut significantly into your returns. Thus, it is always better to start out on your own, learn on the go, and then hire an advisor when your portfolio is diversified.
- An online investing market is another option if you don’t want to work with an advisor. There are several platforms like Motif Investing that can walk you through the process of investment and money management without paying hefty service fees. Moreover, you also get to exercise greater control in managing your own portfolio.
If you’re confused about hiring a financial advisor, don’t rush into taking a decision. Explore all your options and then make an informed choice.