Advantages & Disadvantages of Using a Financial Advisor

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When it comes to investing and planning out your financial life, you can do it by yourself or you can do it with the help of a financial advisor. Hiring a financial advisor can provide you with some advantages like time savings and expert advice. On the other hand, doing it yourself could save some money and give you more control over your financial situation.

Time Saving

  • Perhaps one of the biggest advantages of hiring a financial advisor is that it can save you time. The process of planning out your financial life and selecting individual investments for your portfolio can be very time consuming. When you hire a financial advisor to take care of this for you, it frees up your time to work on other things. If you are a very busy person, you simply may not have enough time to worry about financial matters and your financial advisor can handle these for you.

Expert Advice

  • Another benefit of using a financial advisor is that you can get access to expert advice. Most regular people do not know much about investing or how to plan out their financial lives. Financial advisors make a career out of customizing investment plans to meet individual needs.

Costs

  • On the downside, financial planners cost money, and they can charge you in a number of different ways for their services. For example, some financial advisors charge a percentage of your total portfolio amount per year for managing your account. Other advisors charge you a flat annual fee for their services. Before you choose to work with an investment advisor, you need to determine whether the cost is worth the services rendered.

Poor-Quality Advisor

  • Even though working with a financial advisor can provide you with some benefits, it can also be a mistake if you happen to choose the wrong advisor. Not all financial advisors know what they are talking about. If you choose the wrong one to work with, it could lead to poor decisions being made with your money. Ultimately, you are the one who must deal with the consequences of these poor choices when you reach retirement age. Shop around when you look for a financial advisor, and interview them as though you were interviewing them for a job. Ask each of them about their investing philosophy, and ask how they will craft plans to meet your needs and desires. You will know when you have found a good fit.

References

  • Photo Credit iStock michellegibson
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