Should everyone hire a financial advisor? Even if you aren’t earning a lot?

I’ve been using a financial advisor since about my mid-30s. And frankly, I probably should’ve gotten myself one sooner.

To be clear, my job is to write about personal finance, investing, and planning for retirement. So it’s not as if I know nothing about these topics. But I’ve long felt that getting outside help from a professional can be beneficial — even to someone like me.

In this Reddit post, though, we have a 30-year-old who doesn’t have a very high salary. And they’re wondering if it makes sense for them to hire a financial advisor. I have a pretty strong opinion on this topic, so I’m glad this post hit my radar.

It’s not a matter of money

It pains me to hear people say that it doesn’t make sense for them to work with a financial advisor because they don’t earn a lot of money. In reality, your salary doesn’t matter in that context, nor does the amount of money you have in your IRA, brokerage account, or savings.

The reality is that yes, some financial advisors may have a minimum amount of assets they’re willing to manage. But many financial advisors will take on clients who have very little money and who make little money. Advisors in this category actually want to help people.

And guess what? If you hire a financial advisor despite not earning or having a lot of money, with their help, in time, your financial picture could change.

Those stories you hear of people growing $5,000 or $10,000 into $250,000 aren’t just urban legends. With a solid investment portfolio and strategy, things like that are more than possible. But you may need the help of a financial advisor to get to that place.

It pays to shop around

There are a couple of different ways a financial advisor can get paid. One is to charge a flat fee, and the other is to manage your assets and collect a percentage of their total as a fee.

That percentage could be 1%, or it could be higher. It’s kind of rare for that percentage to come in at under 1% unless you have a lot of money being managed.

If you don’t have much in the way of assets and your salary isn’t that high, I’d say skip the fee-only advisors and use one who will charge a fee as percentage of assets under management. This way, the fee you’re paying is proportionate to the amount of money you have.

For example, if you have a $30,000 portfolio and are charged a 1.5% management fee, that’s $450 per year. It makes more sense to do that than pay $3,000 or so for some initial advice that you then have to run with yourself.

Also, with this structure, your financial advisor is apt to be motivated to help your portfolio grow — because if it gets larger, their fee goes up. So if you don’t earn or have very much, that’s the setup I’d suggest looking for. But I also want to emphasize that you shouldn’t assume a financial advisor won’t want to work with you. You may be surprised at how many professionals are willing to take you on as a client.