7 Reasons DIY Investors Should Consider Getting a Financial Advisor in 2024 (2024)

FAQs

7 Reasons DIY Investors Should Consider Getting a Financial Advisor in 2024? ›

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

Graduating college, getting married, expanding your family and starting a business are some major life events that might cause you to reevaluate your financial situation. A financial advisor can help you manage these life events while making sure you get or stay on track.

Personalization: A Key Quality in a Financial Advisor

Within personalization, people noted risk management was a very important element. Financial advisors can highlight their ability to tailor financial plans based on each person's risk tolerance in order to attract clients.

Many financial advisers charge based on how much money they manage on your behalf, and 1% of your total assets under management is a pretty standard fee. But psst: If you have over $1 million, a flat fee might make a lot more financial sense for you, pros say.

The study reveals that 70% of millionaires work with a financial advisor, compared to just 37% of the general population. Moreover, over half (53%) of wealthy individuals consider their financial advisors their most trusted source of financial advice.

Here's when you may want to forgo a financial advisor and do it yourself: You're confident in managing your own investments: If you are comfortable selecting and managing your own investments, you may not need a financial advisor. Perhaps you follow the markets closely and do your own research on potential investments.

Self-investing is the act of making your own investment choices instead of hiring a professional, such as a financial advisor. This can help you save on professional fees but it could cost you. Working with a financial advisor can increase returns, reduce risk and help you better manage your taxes.

Limited availability: Financial advisors may not be available at all times, which can be a problem if you need urgent advice or assistance. Risk of scams: unfortunately, there is a risk of financial scams in the industry, and it's important to be aware of this risk when working with a financial advisor.

Why do investors hire their financial advisor? ›

Some clients may also lack a financial background and want guidance from an advisor with experience and expertise in working with people like them. Others may need an accountability coach who can keep them from making emotional decisions that may hinder their investing success.

Americans who work with a financial advisor 2022

In 2022, 35 percent of Americans worked with a financial advisor, while 57 percent said that they didn't have a financial representative. The share of Americans approaching a financial advisor decreased slightly compared to the previous year.

For an investor, one of the benefits of working with an advisor is having a real person to talk to, ask questions, share concerns, and discuss real-life events that could impact their finances. These conversations require a foundation of trust.

A financial planner can make more sense if you want a deeper analysis of specific components of your finances or desire a well-rounded, long-term plan. For example, if you want to strategically buy stocks and other assets to help you achieve long-term goals, a financial planner might be better equipped to help.

The Bottom Line. There is always going to be inherent risk in trusting your money with another person. Financial advisors are meant to take care of your money but it doesn't mean each and everyone will always have your best interest at heart.

Both Fidelity and Fisher Investments have an A+ rating from the Better Business Bureau (BBB), although Fidelity is unaccredited. A+ is the highest possible rating and suggests both companies receive relatively few customer complaints and resolve disputes promptly and appropriately.

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

Key takeaway: It's no coincidence that most American millionaires use a financial advisor. With an experienced financial advisor on your side, you are more likely to take the strategic actions necessary to achieve your long-term goals.

Your adviser's fees will be based on many things: what advice you need, how much time it will take, and the size of the assets involved. Advisers often charge between 1% and 2% of the asset in question (e.g. a pension pot), with lower percentages being charged for larger assets.

Any minimums in terms of investable assets, net worth or other metrics will be set by individual wealth managers and their firms. That said, a minimum of $2 million to $5 million in assets is the range where it makes sense to consider the services of a wealth management firm.