Working with a financial advisor wasn’t always on my radar. At the time that I met mine, I was in my 30s saving a decent chunk of money from my salary and overseeing my own investments jointly with my husband.
We met our financial advisor by chance through social channels, and a conversation made us realize there were some holes in our financial plan. We decided to give him a chance, and years later, we’re still clients of his.
In this Reddit post, we have a very high net worth individual wondering if it makes sense to hire a financial advisor. They’re not happy with the idea of paying a fee, since they’re not sure what they’d be getting in return.
The poster makes a valid point. But I think they need to dig deeper before writing off the idea of using a financial advisor.
The benefits of a financial advisor
The poster here has clearly done very well without the help of a financial advisor. So I can see why they’d be hesitant to hire one.
And I’m not saying they should hire one. But they should understand what an advisor can do for them.
It’s true that because of the size of their portfolio, they may be looking at large fees. But a financial advisor may be able to tweak their investment strategy and generate more returns, thereby making up for the fees and then some.
Plus, a financial advisor might be able to introduce the poster to alternative investments they wouldn’t have thought of otherwise. That could lead to stronger returns and more portfolio diversification.
Finally, a financial advisor can tell the poster if they’ve overlooked any aspect of their financial planning, whether it’s life insurance or long-term care insurance. This was something ours pointed out, and I’m grateful for it.
It’s important to find the right person for the job
It wouldn’t be unreasonable for the poster to decide that a financial advisor isn’t right for them. But before making that decision, they should talk to different professionals and hear what they have to say.
To guide those discussions, it’s important to ask some key questions. These include:
- What does your fee structure look like?
- What am I getting in exchange for my fee?
- Do you have experience managing portfolios as large/small as mine?
- How do you communicate with clients, and how often?
- Can I call you with questions at any time?
- Are you a fiduciary?
The last one is important, since it means that your financial advisor is required to put your needs first at all times.
I’d suggest that the poster have a few conversations and see what happens from there. They may decide to continue managing their money on their own, but at least that way they’ll have all the right information.
Finally, the poster should realize that they don’t necessarily have to bring in a financial advisor to oversee their portfolio on an ongoing basis. They could find an advisor who charges an hourly fee and sit down with them for a consult so they can get some advice they can act on. That could save them money while allowing them to benefit from the services of a professional.
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