When is the right time to hire a financial advisor? There’s no single answer, but a thoughtful place to start is with a question of your own: Has managing your money become more complicated than you feel comfortable handling yourself?
Maybe retirement is approaching, and you’re wondering how to replace your paycheck. Maybe you’re weighing a business sale, caring for an aging parent, or exploring leaving a job that no longer brings you joy or purpose.
Those are the kinds of decisions I’d put on the “consider getting help” list. The reason isn’t that you’re incapable of making them. It’s that you want to understand how they fit into your broader financial picture.
In my experience, the decision to hire an advisor is about more than having someone pick investments. Financial planning may also bring retirement income, taxes, insurance, and estate planning into the conversation, with a focus on how those pieces fit together. CFP Board, which sets and enforces the requirements for CERTIFIED FINANCIAL PLANNER® certification, describes financial planning as looking at your entire financial picture, not just your portfolio.
There’s no one-size-fits-all answer to when it’s worth paying for financial advice, but these four situations may help you think through the decision.
1. Turning Savings Into Retirement Income: When to Consider an Advisor
As you progress from your primary working years toward retirement, the question may change from “How much can I save?” to “How do I live on the money I have saved?”
Those are different assignments.
For illustrative purposes, consider a couple who expects to spend $6,000 per month in retirement and receive a combined $4,000 per month from Social Security and a pension. That leaves $2,000 per month to cover from savings or other sources. Identifying the gap is the first step. Next comes deciding which resources to use and how taxes, healthcare expenses, and unexpected costs fit into the plan.
Some may navigate this situation on their own. Others may want an advisor’s help evaluating how savings and other income sources could potentially cover their retirement spending.
2. You’re Facing a Major Financial Decision, Like Selling a Business
Some money questions may be handled one at a time. Others arrive with an entourage.
Imagine the sale of a business. The sale price matters, of course. But the planning questions extend beyond that number: What might you keep after taxes? What income would you need afterward? How do the proceeds fit most effectively with the assets you already own?
Or consider a rental property. Before deciding whether to keep or sell it, you may want to examine its cash flow, debt, upkeep, and role in your retirement.
These are examples of how an advisor’s role may sometimes extend beyond investments into business transitions, real estate decisions, and family cash flow. The challenge is to connect the decision to the rest of the plan.
That doesn’t mean your advisor should also serve as your accountant, attorney, and real estate professional. An advisor may, however, help you recognize when to bring those professionals into the conversation. For example, CFP Board’s financial-planning guide includes a case study in which an advisor recommends consulting an estate planning attorney and a mortgage professional.
Think of the advisor as a quarterback, not someone who plays every position.
3. You Want Financial Planning Beyond Investment Management
Comprehensive planning may help you look beyond the account statement. Depending on your needs and the services included in your agreement, the conversation might cover:
- Retirement income: What will cover your regular spending, and what role should your portfolio play?
- Taxes: How should saving and withdrawal decisions fit across different account types?
- Insurance: Which risks need protection, and does your existing coverage suffice?
- Estate planning: Do your beneficiaries, account ownership, and legal documents align with your wishes?
- Healthcare and aging: How will you plan for your own needs and potential responsibilities involving your loved ones?
CFP Board’s education requirements include insurance and risk management, tax and estate planning, and retirement savings and income planning.
These are planning areas, not a promise that every advisor provides every service. The SEC emphasizes that the services you receive and the fees you pay ultimately depend on your agreement with the firm. Ask what is included rather than assuming “comprehensive” means everything.
4. You Want a Sounding Board for Emotional Money Decisions
There’s another reason I’d consider professional help: You want someone to work through a difficult decision with you.
Maybe a market decline makes you want to sell everything. Maybe someone else’s hot investment leaves you worried about missing out. Or maybe you believe you’re financially prepared to retire but still feel uncertain about taking that step.
In my view, an advisor’s job should include helping you slow down and revisit your goals before making a difficult decision. It’s about reviewing your plan, checking whether your circumstances have changed, and considering your options before acting on emotion.
Having someone to talk through financial decisions with may also create room for a bigger question: What do you want your money to help you do? As retirement approaches, that conversation may move beyond when you’ll leave work to how you’d like to spend your days.
I call the activities that bring purpose and enjoyment to your life “core pursuits.” They might include volunteering, traveling, gardening, or spending meaningful time with family. You don’t need every detail of retirement mapped out, but giving those activities some thought may help you put more concrete goals behind the numbers.
An advisor may help you explore how those goals fit with your financial resources. That gives the planning conversation a more personal focus: not simply how much you’ve saved, but what you hope those savings will support.
How to Choose a Financial Advisor: Fiduciary Duty, Fees, and Conflicts
Picture two orange peppers in the produce aisle: a bell pepper and a habanero. They share a color and a category, but one is sweet and mild, while the other packs serious heat. Looking alike doesn’t make them interchangeable.
It’s worth taking a closer look at financial professionals, too. A title alone doesn’t tell you which services someone provides, how they’re paid, or what obligations apply to the advice they give.
Before hiring anyone, I’d want to understand two things: their responsibilities to you and how they earn their pay.
Fiduciary and Fee-Only: What Does Each Term Mean?
As a CERTIFIED FINANCIAL PLANNER® professional, I’m required by CFP Board’s standards to act as a fiduciary when providing financial advice to clients. That means acting in their best interests. Those standards also require avoiding conflicts of interest or fully disclosing material conflicts, obtaining clients’ informed consent, and properly managing those conflicts. A fiduciary duty does not mean conflicts cannot exist.
The SEC makes a similar distinction in its guidance on investment advisers: They must act in clients’ best interests, but their compensation arrangements may still create conflicts that investors should understand.
“Fee-only” answers a different question: How is the advisor compensated? The National Association of Personal Financial Advisors, or NAPFA, describes fee-only planners as paid directly by clients, without commissions for their work. Depending on the arrangement, those fees may be hourly, flat, retainer-based, or calculated as a percentage of assets under management.
I favor a fee-only fiduciary approach, but I wouldn’t treat those words as the end of the conversation. Understanding the actual services, costs, and potential conflicts matters more than simply recognizing a label.
Questions to Ask Before Hiring a Financial Advisor
Here are the questions I’d bring to an introductory meeting:
- Will you act as a fiduciary when providing advice to me, and are there circumstances in which you would act in another capacity?
- How are you and your firm compensated, including any commissions, referral payments, or other financial incentives?
- What would I pay in dollars, including advisory fees, investment expenses, and other applicable costs?
- What conflicts of interest should I understand, and how do you address them?
- Which services are included, and what would cost extra?
- What experience do you have helping people with needs like mine?
These questions build on the SEC’s guidance to examine an adviser’s services, compensation, conflicts, and relevant experience before hiring them. The SEC also recommends reading the agreement and applicable disclosure documents, including the firm’s relationship summary and Form ADV Part 2A brochure. Those documents may help you compare the conversation with the services and terms being offered.
Finally, check the background of both the person and the firm. The SEC’s Investor.gov search tool provides access to registration information and any reported disciplinary history.
Do You Need an Ongoing Financial Advisor or Just Targeted Help?
Learning what an advisor offers doesn’t necessarily mean you need an ongoing relationship.
If your finances are relatively straightforward, you’re comfortable making decisions, and you have the time and interest to keep your plan current, you may prefer to manage things yourself. I wouldn’t assume that everyone needs to delegate that responsibility.
There’s also room between doing everything yourself and hiring someone for ongoing management. NAPFA notes that fee-only planners may offer hourly or flat-fee arrangements, although the services available depend on the planner. You can ask whether a focused engagement would address your needs and what follow-up, if any, it would include.
Perhaps you want help evaluating your retirement readiness or reviewing how the pieces of your financial life fit together. Before committing, clarify the scope, cost, and responsibilities on both sides, including whether follow-up is included.
The goal isn’t to hand over as much responsibility as possible. It’s to find an appropriate level of help for the decisions you’re facing.
Should You Hire a Financial Advisor? Start With Your Needs
No single birthday, account balance, or life event universally signals the need to hire a financial advisor.
You may consider getting help when your financial decisions become more complicated, when you want another perspective on an important choice, or when managing everything yourself requires more time than you want to give it.
Look for someone who can clearly explain what they’ll do, what you’ll pay, and where their responsibilities begin and end.
Start with the life you want your money to support. From there, consider whether professional guidance may help you develop and maintain a plan that fits.
Have questions of your own?
If you’re weighing whether professional guidance fits your situation, we’re happy to talk it through. In an introductory conversation, you can ask one of our advisors how we’re paid, what our services include, and whether our approach fits the decisions in front of you.
Disclosures:
This material is provided for general informational and educational purposes only and should not be construed as investment, tax, or legal advice or a recommendation of any particular strategy. Individual circumstances vary; consult a qualified professional regarding your specific situation. All investing involves risk, including the possible loss of principal. No strategy can guarantee results. Examples are hypothetical and for illustrative purposes only and do not represent actual clients. Information about Capital Investment Advisors’ services, fees, and conflicts of interest is available in our Form ADV Part 2A and Form CRS.
