6 Signs It’s Time to Hire a Financial Advisor
A common misconception is that you don’t need to hire a financial advisor until you’re close to retirement. But there’s no age or career point at which it becomes “the right time” to work with a professional.
Oftentimes, people really need help with financial planning in their 20s, 30s and 40s — when they’re juggling saving for retirement and paying down student loans or credit card debt with major purchases like their first home or car.
Deciding whether you should hire a professional to help with your money is less about age and more about your current financial situation.
Here are six signs you should work with a financial advisor.
1. You recently experienced a major life change
This could be a variety of things: you’re newly engaged, you just got married, you’re going through a divorce, you’re about to start a family, you’re applying to grad school, etc.
If any of those scenarios apply to you, consider hiring an advisor. After all, a major personal change is going to affect your finances — and, most likely, it will complicate them.
Depending on the change, you’re going to face big questions: How do you combine your finances with your partner? Do you need to get a prenup? How will your assets get split up if you’re getting a divorce? How do you budget for major, upcoming expenses like childcare or education? A good advisor can help you answer all of these questions and more.
2. Your wealth increased significantly
If you get a major salary bump from a new promotion or job, or if your net worth spikes from a bonus or windfall, you should consider working with an advisor. They’ll help you determine the smartest way to handle your extra money. They can advise you on how much of it to spend, donate and invest — and where to invest it. Plus, they’ll make sure you don’t spend all of your newfound cash.
If a pay bump puts you in a higher tax bracket, an advisor can also help you find ways to save on your tax bill.
3. You feel behind on your retirement savings
Do you feel unprepared for your golden years? Are you unsure how much money you need to last through retirement? Are you struggling to save enough?
If you don’t feel on track, an advisor can help you get to where you need to be.
Retirement is a long-term goal that requires careful planning. It’s important to have a “retirement number” in mind, which depends on when you want to retire and what you want your lifestyle in retirement to look like. You’ll also want a clear plan in place that will get you to that number. If you need help with the planning process, consider hiring a financial advisor.
4. You tend to panic when the market dips
If you get cold feet whenever there’s a downturn in the market and think about (or actually do) pull your money out, you need someone who will keep your emotions at bay, provide objective advice and remind you to stay the course.
The stock market experiences declines, which isn’t fun to deal with, but it’s normal — and there has never been a declining market that has not ultimately recovered. If you pull your money out of the market during a downturn, you may miss the recovery.
A solid advisor will help you remember that it pays to stay invested. It’s expensive to panic.
5. You and your partner don’t see eye-to-eye when it comes to money
Money problems are a leading cause of divorce. If money is causing any levels of stress in your relationship with your partner, it’s worth it to hire a financial advisor. Without one, you could be arguing about money for the rest of your lives.
Especially if you and your partner have completely different values and beliefs around money, an advisor can help you sort through issues and teach you how to work as a team, rather than as two individuals.
6. You continually put off important money decisions
Maybe you know the importance of having an emergency fund, but keep telling yourself you’ll build it up next month. Or, maybe you understand how compound interest can make you rich over time, but you don’t know how or where to invest your money. Perhaps you have aspirations to buy a house, but haven’t gotten around to setting up a savings account for the down payment.
If you tend to delay important money moves like these, it might be time to pay for an advisor who will not only help you take action but will help you make the smartest possible decisions.