Financial Advisor

Should you work with a financial advisor?

You may have asked yourself if working with a financial advisor would be a good idea. In most cases the answer would depend on your specific circumstances, including your budget, your goals, and your existing investments. In this post we try to shed light on some important factors you should take into consideration that could affect your decision.

Who Can Benefit from Working with Financial Advisors?

A common belief is that financial advisors mainly work with very wealthy individuals and families. However, this is not always the case. Even though wealthy individuals very often rely on the advice and service of financial advisors, most financial advisors tend to work with middle-class families.

These families often need advice and guidance related to savings, retirement planning, investments, and other important financial decisions. Being able to benefit from the advice of a qualified professional who is aware of the relevant rules and regulations can certainly be very beneficial.

Start by asking yourself some questions and assessing your level of comfort with making financial decisions on your own. This can help you to determine whether it would be a good idea for you to start working with a financial advisor

The Emotional Aspect of Decision Making

Although this may not seem obvious, one of the biggest benefits of working with a financial advisor could be to eliminate some of the emotional decision making around financial matters. It is a well-known phenomenon that when it comes to financial decision making, emotions, rather than cold hard facts, tend to play a significant role.

When a financial advisor gets involved in the decision-making process, they would be able to help keep some of the emotional factors out of the equation and maintain focus on the objective facts.

Robo Advisor
What About Robo-Advisors?

In recent years we have been witnessing the rise of more and more financial planning apps and websites. These are sometimes referred to as robo-advisors and in some cases, they are enabling financial management decision making without the involvement of a financial advisor.

The biggest advantage of these robo-advisors is that they help save on the cost of using traditional financial advisors. However, you will need to have a certain degree of financial knowledge and be confident in your money management capabilities to make the best use of robo-advisors. If you are not sure you are there, then using a traditional financial advisor might make the most sense for you and along the way you can work on improving your financial knowledge base in order to increase your level of confidence. 

You can start by referring to the financial education section of our website to get started on that journey. 

Major Life Events

Even though using robo-advisors could be the right choice in many situations, there are obviously situations where they cannot be as helpful as an actual financial advisor. Certain situations are too complex or too personal to be handled by algorithms.

There are often important tax consequences related to many financial decisions. These can be quite complex and nuanced and having a qualified financial advisor on your side can help you take all the relevant factors into consideration. For now this is something that is difficult to achieve with robo-advisors

Your Comfort Level with Financial Decisions

Some individuals may feel confident in their financial decision making and their level of financial knowledge but would still like an advisor looking over their shoulder. If you fall in that category, then you may be able to get help by hiring a financial advisor and paying a flat, one-time fee once a year. You would then be managing your own accounts the rest of the time. This could be a good compromise that can help you save on fees and at the same time provide you with access to a professional advisor.

Making Decisions

However, if you don’t feel confident in you own level of knowledge and capability, or if you feel your financial situation may be relatively complex, then working more proactively with a financial advisor may be the most beneficial option for you in spite of the fees involved.

Finjoy Capital is not a financial advisory firm.
This article is for informational purposes only and is not a substitute for individualized professional advice.