Are you overwhelmed with your finances but don’t even know where to start to get them in order? You have several options: bury your head in the sand, subscribe to personal finance blogs and podcasts to learn from others, or hire a finance professional. If you found your way to this article, you might be leaning towards this one.

Most of us haven’t learned the basics of construction and protect our heritage by our parents, and we are certainly not taught about it in school. Instead, we’re just thrown in the deep end and expected to sort things out when we become “adults,” which often leads to complications.

Or maybe you consider yourself knowledgeable, but don’t have the time or resources to manage your increasingly complex financial situation.

Either way, you can save yourself a big headache by hiring a financial advisor.

What is a Financial Advisor?

First things first: what is a financial advisor? A financial consultant provides personal finance advice and guidance to help individuals achieve their goals and overcome obstacles along the way.

Think about making investments, saving for college, planning for retirement, getting insurance, and making long-term plans.

We will go into much more detail shortly about the type of services financial consultants might offer and what you can expect from them. However, for now, you should know that they are there to guide you on the path to financial independence or to help you in your particular situation.

Financial Consultants vs Financial Advisors

If you’ve ever done some research on getting financial advice, you may also have come across the term “financial advisor.” What is the difference between the two roles, you ask?

On the surface, they look very similar. Both give financial advice to their clients on similar financial topics, both work directly with clients to guide them through their queries, and both can be self-employed or work for companies.

It is also true that both professionals may be able to buy and sell financial products on behalf of their clients.

However, there might be some subtle differences. While financial advisors help break down individuals’ financial situations and make plans, financial professionals posing as financial advisors may be in a better position to help with more specific tasks and strategies. Rather than offering basic plans, consultants can create complex strategies involving collaboration with other finance professionals (like accountants and investment managers).

Another potential distinction could be that financial advisors tend to limit themselves to occasional or one-time appointments with their clients. In contrast, financial advisors often favor a longer-term relationship.

Many argue that the distinction between financial consultants and advisors is just a matter of semantics, while others believe there is a substantial difference – and to make matters even more confusing, there is no two identical financial advisors or consultants.

Before agreeing to work with a finance professional, it is best to ask him how he exercises his role, how they are paid, the areas they focus on and why you should hire them. Assume nothing.

Specializations

The difference between financial advisers and financial consultants is not the only important aspect to consider when you start looking to hire a financial consultant or adviser. Even within the same category, all finance professionals are not equal!

Financial consultants (and advisors) may have different specializations, which means they are better equipped to meet certain needs more than others. If you know you need help preparing for your retirement, for example, you may be able to find a financial advisor who exclusively helps clients in this regard.

Of course, they will still be able to provide insight into other areas – just don’t expect the same level of detail in their answers.

What do financial advisors do?

It would help if you had a brief understanding of what financial consultants do today, but you’re probably wondering exactly what to expect from them.

When you first decide to work with a financial advisor, it usually involves at least two appointments: one where the consultant tries to get a general understanding of your goals, and another where they can start offering specific advice. .

These recommendations will focus primarily on your expenses, income, investment assets, and goals. For example, a client may have a salary of $120,000 and wonder how to allocate his money to send his two children to college in ten years while preparing for a comfortable retirement.

The tasks to which financial consultants contribute include:

  • Analysis of your personal assets and liabilities
  • Buying and selling investments
  • Give recommendations on insurance policies
  • Make plans to help you achieve specific financial goals
  • Creation of budgets
  • Liaise with other finance professionals

However, while financial consultants can certainly help with the planning and execution of investments, they don’t tend to deal with the finer details of complex portfolio management and analysis. If this is your top priority, you may need to speak with a financial analyst or ask if the financial consultant works with a financial analyst who will play a role in overseeing your investments.

How can financial advisors help you?

Still not sure if hiring a financial consultant is the right decision for you? Don’t let your uncertainty prevent you from getting the advice you deserve. There’s never a bad time to start taking your finances seriously, so even a free introductory call with a financial advisor can be worthwhile.

Let’s go over some common scenarios that financial consultants can help you with.

If you’ve recently gone through a major event that will impact your finances, such as a wedding or retirement, now’s a great time to get a financial advisor to help you plan everything properly, especially if you’ve changed your life. job and have multiple investment accounts and retirement plans that you can barely keep up with.

Similarly, if you hope to make a big buy like a house or financing a child’s education, the help of a consultant can be helpful to ensure that you plan carefully.

However, while almost anyone can benefit from professional help, hiring a financial advisor doesn’t always make sense.

You may not be quite ready for this stage if you are starting out in life and barely have enough money to meet your monthly expenses; no matter save or invest anything. A consultant may not be able to help you much if you have limited capital, but you will still have to shell out money from their fees. In this case, it might be better to opt for a financial coach or a robo-advisor instead – more on that later.

How to find a financial adviser

Convinced that working with a financial advisor is the way to go? You might be wondering exactly how to find one and what to consider.

Weathtender.com is a great place to start, a website dedicated to helping people find the right finance professionals and resources for their individual needs. You’ll find directories of financial advisors and coaches, as well as hundreds of personal finance blogs and podcasts to explore.

The world of financial consultants and advisors is not the Wild West – although each country (and sometimes state) has its own rules and regulations, these professionals generally cannot operate without the proper licenses and certifications.

Beyond the required licenses, it’s worth considering whether you should hire a professional who has pursued a best financial certification stand out from other consultants and financial advisors.

For example, a Chartered Financial Consultant (ChFC) assists clients in complex situations and has passed a comprehensive exam covering retirement planning, insurance, tax and investing.

Online or in person

When it comes to making such important decisions about their finances, most people prefer to meet someone in person to advise them. It’s a great way to develop a relationship and build trust.

However, another option is to find a financial consultant online. While it might not seem as appealing to complete such an important process via video call, it can make it easier to find someone who specializes in the particular area you need help with.

It can also be a great choice for anyone who lives in a more remote and isolated location with access to fewer options. Plus, you could save money!

Financial coaches

Especially if your focus is on deleveraging or building an emergency fund, a financial coach is probably a better financial professional for you than a financial consultant or advisor. A financial coach will focus on your daily financial habits like budgeting, debt, and saving to help you identify which habits need to change to achieve your bigger goals, and then support you as you work toward that change.

Robo-advisors

If your budget is limited, a final option you might want to consider is using a robo-advisor: an automated tool that offers investment and financial advice, usually through an app or online platform. For example, Improvement is a platform dedicated to retirement assistance, and even Vanguard has its own Digital advisor function.

Unless you want very simple, generic investment advice, this shouldn’t be considered a substitute for working with a qualified professional. But if you already know you can’t afford anything else, it’s better than picking stocks at random and hoping for the best.

Get the help you need

If you’re not used to paying for financial services, the idea of ​​spending money to hire a financial advisor may seem indulgent. Maybe you feel guilty about it.

But don’t think of it as an expense, rather it’s an investment in your financial future. Sometimes you have to spend a little money today to make a little more money tomorrow.

Parting with a few hundred (or thousands) of dollars today could make an exponential difference to your retirement nest egg or the financial well-being of your loved ones.

If that’s not worth the money, I don’t know what is!


Brian Thorp is the founder and CEO of Wealthtender, a leading personal finance website that helps thousands of people every month find the best financial advisors, coaches and educational resources to enjoy life with less financial stress.