Is a financial advisor worth it?

Coming from an advisor, you’re probably expecting me to say “yeah of course everyone should have an advisor!”


But I would be lying.


I don’t believe that everyone should have a financial advisor, but I do believe a large portion of the population would be in a better position financially if they had one.


And to answer the question “Is a financial advisor worth it?” - it depends.


Some advisors aren’t worth it.


But some advisors have such an impact on their client’s lives that they develop lifelong friendships.


The value of a financial advisor


For starters, a financial advisor can be viewed as an investment in yourself rather than an expense. You’re investing in yourself to ideally put yourself in the best financial position possible now and in the future.


It’s no different than your career. If you’re fully committed and involved in your job, you’ve probably seen the benefits of paying for a conference or investing in personal development books.


If you’ve used a personal trainer and got great results, the cost of those sessions feel almost non-existent, right?


Because you achieved your desired goal for those costs. It was worth it to you.


If you haven’t invested in yourself before, a financial advisor may be a great place to start that leads to more.



How an advisor helps


To put it simply, an advisor helps discover and clarify your goals and works with you to develop a plan to reach them.


We don't pick magical stocks that double every month or try to time the market.


If you're talking to an advisor that says they do things like this, you're probably better off investing your money into the lottery.


This tweet from financial advisor and thought-leader, Carl Richards is one of the best and most simple explanations I've seen when describing an advisor:


A financial advisor not only works with you to achieve your goals, but also act as a safety net when making decisions.


Say goodbye to the days of uncertain decisions. With an advisor, you'll have someone to bounce ideas and thoughts off of and and someone to help make the best decisions for YOU.


Unfortunately, making mistakes and messing up is a fundamental part of learning, but with your money there isn't a lot of room for mistakes.


Decisions you make today will have an impact on your money in 10, 20, 30+ years.


An advisor also helps keep emotions and behaviors separate from your money by providing advice and fact-based information when making these decisions.


This process of an advisor helping guide decisions and acting as a partner is considered "behavioral coaching".


A Vanguard study of more than 58,000 self-directed IRAs showed that investors who made material changes to their strategy EVEN ONCE in the five-year period from 2008 through 2012 suffered an 8 percent-plus hit to performance.


Having a financial advisor as an accountability partner will help improve decision-making by collaboration and allow you the peace of mind you've been looking for.



In summary


A financial advisor may be one of the best investments you make throughout your life if you take the time to select the right one for you and your situation.


The impact a good advisor will have on your life, as well as your finances, will pay for itself time and time again.



ALSO READ: How COVID-19 Has Changed Personal Finance