Are You the Type of Person That Could Use a Financial Advisor?

The idea that “you don’t know what you don’t know” applies to all of us, no matter our age, life stage or intellect. When it comes to personal finance management, it is difficult to know whether you should seek help from a professional or not. And we get that! So we have compiled a list of people that are the most obvious candidates for a financial advisor.

1. Approaching retirement

As you approach retirement there is no time for a financial do-over. Whatever decisions you have made with your retirement savings will be what you have to work with. But, that doesn’t mean that you can’t maximize the benefits from that. A financial advisor can help you decide which investments to access first, and which to hold off on drawing from. This advice can help you both from a cash flow perspective and from a tax perspective.

2. Newly single from a divorce or death of a spouse

Losing a spouse, whether by divorce or death, can change everything when it comes to your personal finances. In order to reduce the complications faced down the road, it is best to get professional advice on how to handle any sudden influxes of cash, change in yearly expenses, changes to insurance policies or overall changes in financial goals. Give yourself the peace of mind to move forward, knowing that all your finances are in order and that you have created the foundation for the best situation going forward.

3. Big Career Promotion

As a recent graduate or someone just starting out in their career, hiring an advisor may be a stretch too far. However, if you recently received a big promotion in which your annual compensation increased significantly then it is a good time to chat with a financial advisor who can help you organize and allocate extra savings, help you avoid “lifestyle creep”, and guide you to more effectively grow your wealth. It’s also a great time to set up the basic structure of your financial life, allowing you to avoid the need for a financial do-over” when things become more complex.

4. Do It Yourself (DIY) investor that’s strapped for time

With technology as it is today, it is as easy as it’s ever been to invest your money yourself. And many people have the skillset to do so – very effectively. Unfortunately, DIY investors often find themselves without the luxury of time. Investing is time-consuming. Besides rebalancing, tax harvesting, dividend reinvestment, and risk management, it involves a fair amount of research and analysis even before any investing can begin. DIY investors that find themselves lacking the time to adequately manage their investments should consider outsourcing some, if not all tasks, to a financial advisor. An advisor can manage your investments for you, but more importantly, they can look at your financial life holistically, and highlight areas that could use some extra attention. For instance, DIYs often overlook the component of tax planning when considering which type of investment accounts to allocate savings towards. In other instances, DIYs often don’t stay on top of who their beneficiaries are in different savings or investment accounts which can be problematic from an estate planning perspective. Your time is precious, make sure you are making the right decision about how you use it.

5. People with multiple sources of income

For those of us with a simple W2 income stream, investing through a 401(k) ourselves can be a simple and straightforward process. Things get a little more complicated when you have multiple income streams, foreign investments or lots of deductions. If you find yourself in this situation, working with a financial advisor will not only save you hours of your time but it could save you dollars as well in the long term.

6. Starting a new business

The decision to be self-employed is a big one. Not only could it mean that you have significantly less time on your hands, but it also means changes in a number of aspects of your personal finance life. Obvious changes include your tax structure as well as the need to consider how to manage employee salaries, taxes, and benefits. These can be complex issues that are best handled properly and efficiently the first time around to avoid hassles down the road. A financial advisor can be invaluable during this time.

7. Starting a family

Starting a family – whether it be getting married or having children – brings with it a number of personal finance considerations. A financial advisor can be useful during this stage of your life, helping you to consider how to handle your taxes, how to combine incomes [or not], plan for college, buy life insurance or adjust your beneficiaries in your investments and savings accounts.

8. You’re ready to bridge the intention-action gap

The intention-action gap is a term used in behavioral economics to explain why your new running sneakers remain unused in your closet, despite your lifelong desire to complete a marathon; why so many diets fail, and why it takes some people months (if not years) to hire a financial advisor. The intention-action gap is the massive space in time between deciding what it is we intend to do, and actually doing it. Moira Somers Ph.D., a clinical neuropsychologist, professor, and executive coach, explains that only 20% of us are ready to bridge that gap. And we see this ALL THE TIME here at Zoe. Many clients know that they want to hire an advisor, they know why and are completely on board. But they are not ready to take action and actually hire someone. If you are ready to create immediate change to your financial situation, no matter the reasons why then you are ready to hire a financial advisor.

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Hiring a financial advisor is a big deal. It’s a decision that you should only make if it is 100% right for you. It’s important to understand if you are someone that could use the professional help before you take the step to hire someone.

For examples of what financial help certain people need, check out our blog: Financial Advisors, the tell-all series: do I need a financial advisor?

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