When to Hire a Financial Advisor?


Most people wait until they’re ready to retire before considering working with a financial advisor.  Financial planning should start much sooner; the moment you decide you want to retire someday.  For people in the beginning stage of their career, I encourage you to start planning now.  The sooner you create a guide and roadmap for your financial future, the sooner your decision making will improve during complex or uncertain financial situations.  If you decide you’re in need of a financial service, we strongly recommend seeking out your local fee-only wealth management firm and working with a Certified Financial Planner™ (CFP®).  Fee-only firms are built to work in your best interest and do not receive any back end benefits or commission.  Learn more about fee-only firms in our blog 5 Questions to Ask When Choosing a Financial Advisor.

When hiring a financial advisor is premature?

Not everyone should hire a financial advisor, at least not at the beginning stages of wealth building. Financial planning can be costly at times. If your income level isn’t enough to cover your basic needs and expenses or if paying off massive credit card debt is your number one priority, financial planning may be premature in your situation.  Consider seeking a qualified credit counselor, than a financial advisor. 

How much does a financial advisor cost?

The cost will vary depending on the complexity of the plan but expect the initial plan to cost more than $900.  For fee-only firms, anywhere from $1,200 - $1,500 is moderately common.  Think of this as an investment for your future.  You’ll want to consider a cost/benefit analysis when hiring an advisor.  How much will it cost vs. the value you gain in return?  

Related: Do You Know What You’re Paying Your Financial Advisor?

So, when should you hire a financial advisor?

The simple and straightforward answer, when you understand you need help because you feel lost in reaching your current or future financial goals or you simply want the reassurance from an un-involved third-party. There are various reasons why it can be beneficial to hire a financial advisor. Below are three common examples of when people feel the need to hire a financial advisor:

  1. Starting a family

    You want to make sure you’re on the right track for a healthy retirement and the future success of your children.  Financial advisors help with planning for life insurance, saving for college, purchasing a home, estate planning and prioritizing all financial responsibilities that come with building and maintaining a legacy for your family.

  2. Approaching retirement

    Financial advisors help with understanding if you’re financially ready to retire, to maximizing your social security benefits, and strategies for withdrawing from your retirement accounts. 

  3. You want someone else to manage your wealth

    For people who are high earners or have high-net-worth and want to focus on other areas of life besides managing their money, hiring a financial advisor makes sense.  A financial advisor can help with saving on taxes, managing investments, and transferring assets.   

What are the advantages of working with a CFP?

Here are a few advantages for hiring a Certified Financial Planner™ (CFP®) aside from performing analysis on your own or working with an advisor that doesn’t have this designation.

“Now, more than ever, planning professionals are an essential resource to the public. The CFP® designation is widely recognized as the highest standard in personal financial planning. When you choose an advisor, you can be assured that they have completed extensive training, fulfilled and continue to fulfill education and experience requirements, and are held to strict ethical requirements. Every CFP® holder has met key standards that are known as the "four E's:" education, examination, experience, and ethical requirements. An excellent CFP® firm can usually support you in the following areas”*:

  • Investment Management

  • Tax Analysis and Management

  • Cash Flow and Budgeting

  • Retirement Planning

  • Insurance Analysis and Risk Mitigation

  • Educational Funding for Children

  • Asset Transfer and Estate Planning

  • Real Estate Analysis

  • Business Financial Planning

Related: How to Choose Your Financial Advisor

Each area named above can be nuanced and may require additional specialties.  Your CFP® firm will let you know if an outside technical expertise is needed for your specific financial need.

CFP® professionals tie all the components of your financial life together. Once a financial plan is developed, you can make an informed financial decision with the understanding of how the decision(s) may impact your overall goals

One thing any advisor will be sure to tell you…don't procrastinate!  Ready to get started with your financial plan?  Contact Lighthouse Financial for your free consultation.


*Restatement of the podcast from Lighthouse Financial dated 3.27.2018. Answer provided by George McDaniel, CFP® and founder of Lighthouse Financial.

*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.