If you are an avid reader of the Retiring Wise blog (thank you!) you may have noticed that we often suggest talking with a financial advisor when making plans with your finances. I have received several comments from readers who say having a financial advisor is just too expensive and just not in the budget.
Financial planners can help Americans at any income level. According to the 2012 Household Financial Planning Survey conducted by the Certified Financial Planner Board of Standards, only 31 percent of households had a financial plan on their own while 5 percent were using a financial advisor. The rest of the participants in the survey did not have a plan in place and were not seeking outside help for planning.
Typically, financial advisors get paid in a few different ways. Some financial advisors get paid hourly, some by the amount of your investments and some by a flat fee. If cost is the most important thing to you this should be the first thing you discuss with your potential advisor. The next thing you want to discuss is their experience with your type of finances. This can be a very topical discuss without having to get into a lot of money details. The advisor will be able to determine if they are a good fit for you and your goals.
Once you determine payment and their experience you will want to discuss how often you should see your advisor. For most people an annual visit should be perfect for managing your finances. If you have a diverse portfolio a quarterly meeting may be needed.
So, you may be asking yourself…okay I understand that I need a financial advisor….so how much is it going to cost me? As I mentioned before there are several ways a financial advisor may charge you. Typically you can expect your session with your advisor to run anywhere between $150 and $300. However, you do have some free options through the National Association of Personal Financial Advisers. You can also find fee-only financial advisors at Certified Financial Planners.
Before you pay any money for a session with a financial advisor make sure to verify their credentials. You want to work with someone who is credible and has the knowledge to help you financially. Some credentials you financial advisor should have is the certified financial planner (CFP) or the personal financial specialist (PFS) or the chartered financial analyst (CFA). These are all awards that have taken the financial advisor considerable amount of time and expertise to achieve. If your financial advisor lists any credentials do your research in to the credentials. If they are designations that do not take much time or skill you may want to steer clear of the advisor.
If you are looking for a financial advisor there are some other things you should be looking besides their credentials. Check out one of our articles, How to Pick a Financial Advisor, in the Finance section of our blog.