A lot of people think they don’t need to hire a financial advisor until they’re close to retirement, but there’s no set age signaling it’s “the right time” to work with a professional.
In reality, you probably need the most help with financial planning in your 20s, 30s, and 40s, when you’re trying to save for retirement, pay down student loans and credit card debt, and buy your first home
Deciding whether you should hire a professional to help with your money is less about age and more about your current financial situation.
6 Signs It’s Time to Hire a Financial Advisor
Here are six signs it may be time to find a financial advisor to level up your personal finances and plan for the future.
- You Recently Experienced a Major Life Change
- Your Wealth Increased Significantly
- You’re Behind on Retirement Savings
- You Tend to Panic When the Market Dips
- You and Your Partner Don’t See Eye-to-eye on Money
- You Continually Put Off Important Money Decisions
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1. You Recently Experienced a Major Life Change
Big life changes can have a major effect on your day-to-day finances and plans.
Here are some milestones and life changes that can shake up your finances:
- Getting engaged
- Getting married
- Going through a divorce
- Starting a family
- Applying to grad school
- Earning a major promotion
If any of those scenarios apply to you, consider hiring an advisor. Depending on the change, you’re going to face big questions:
- How do you combine your finances with your partner?
- Do you need a prenup?
- How will your assets get split up if you’re getting a divorce?
- How do you budget for major, upcoming expenses like childcare or education?
A good advisor will be well-versed in dealing with complex financial situations. They can help you answer these questions and come up with an actionable plan that’s tailored to your situation.
2. Your Wealth Increased Significantly
If you get a major salary bump from a new promotion or job, your side hustle takes off, or your net worth spikes from a bonus or windfall of cash, you should definitely consider working with an advisor.
They can help you determine the smartest way to put your extra money to use, advising you on how much of it to spend, save, donate, and invest.
They can also advise you on where to invest your money based on your risk tolerance, goals, and investment timeline, helping you to build a diversified portfolio. And working with an advisor can help you avoid the temptation of spending it all at once.
It’s also important to consider the tax impact of newfound money—if a pay bump puts you in a higher tax bracket, an advisor can also help you find ways to save on your tax bill.
3. You’re Behind on Retirement Savings
If you don’t how much money you need to retire or you’re struggling to save for retirement, an advisor can help you get where you need to be.
Retirement is a long-term goal that requires some careful planning. It’s important to calculate your retirement number, which depends on when you want to retire and what you want your lifestyle in retirement to look like.
You’ll also want a clear plan in place to get you to that number. If you need help with the planning process, consider hiring a financial advisor to help you map out the road to retirement.
4. You Tend to Panic When the Market Dips
If you get cold feet whenever there’s a downturn in the market and think about pulling your money out (or you actually do it), hiring an advisor could be the right call.
A financial advisor can help you keep your emotions at bay, give objective advice, and remind you to stay the course.
Stock market declines are bound to happen. While they aren’t fun to deal with, these dips are normal, and there has never been a declining market that hasn’t ultimately recovered.
Bottom line—if you pull your money out of the market during a downturn, you may miss the recovery. A solid advisor will help you remember that it’s expensive to panic and it pays to stay invested.
5. You and Your Partner Don’t See Eye-to-eye on Money
According to a recent survey from the Institute for Divorce Financial Analysts, or IDFA, money issues account for 22% of divorces in America, falling in third place behind infidelity and incompatibility.
If money is causing any level of stress in your relationship with your partner, it can be well worth the cost to hire a financial advisor. Without one, you could be arguing about money for the rest of your lives or getting a divorce over irreconcilable financial differences.
If you and your partner have completely different values and beliefs around money, an advisor can help you sort through issues and teach you how to work as a team, rather than as two individuals.
6. You Continually Put Off Important Money Decisions
If you have a hard time pulling the trigger when it comes to anything related to your finances, an advisor could give you the push you need to be proactive.
Maybe you know the importance of having an emergency fund, but you keep telling yourself you’ll build it up next month.
Or you understand how compound interest can make you rich over time, but you don’t know how or where to invest your money.
Or maybe you have aspirations to buy a house, but you keep putting off saving for a downpayment.
If you tend to delay important money moves like these, it might be time to pay an advisor to help you take action and make the smartest possible decisions.
Hiring a financial advisor might seem like an unnecessary expense, but a good advisor can save you money in the long run by helping you make smarter financial decisions and avoid costly mistakes.
When you work with an advisor, you get a personalized financial roadmap that can guide you on the path to reaching financial independence.
No matter what stage of life you’re in, take stock of your current finances, upcoming milestones, and future goals to determine whether or not it makes sense to start working with a financial advisor.
If you check any of the boxes in the article above, consider hiring an advisor now. Your future self will be grateful you did.