Do You Need a Financial Consultant?


When your financial problems become overwhelming, you may be inclined to enlist the services of a financial consultant. Truth be told, anyone can benefit from the sage advice of financial consultants, analysts and investment gurus. You don’t need to be in debt or on the brink of financial ruin, to consider the advice of financial professionals.

There are several aspects to consider however, notably the costs of using a financial advisor. Provided the advice is sensible and the reputation of the advisor is credible, you may wish to ‘invest’ some money in these services. Too many people avoid expert advice and end up with lacklustre investment portfolios that perform well below market expectations.

This begs the question: When is the right time to use a financial consultant?

Many traders and investors today acquire their knowledge online. When your curiosity is piqued, you may be inclined to run a search on a particular stock, commodity, currency pair, or index. Depending on the authenticity of the information you have sourced, your frame of reference may lead you towards making an investment.

Is this wise? Truth be told, there are good finance writers, bad finance writers and mediocre finance writers peppered over the Internet. A writer who is skilled at his/her craft may appear convincing and knowledgeable, but completely lacking in market insights. Most of the stories that you read on the Internet – blogs, comments and the like – are old news. Sometimes they are rewrites of existing articles, with slight modifications to spruce up the content. This brings into question the accuracy and credibility of the data.

A financial consultant is judged by the performance of his/her portfolio of investments. Word-of-mouth recommendations by clients are the bellwethers of your chosen consultant’s success. It is always a good idea to employ the services of a CFP (Certified Financial Planner) if you are going to need professional financial advice. Being knowledgeable in personal finance does not make you an expert in individual financial counselling.

Unfortunately, the costs of financial advisors/consultants are prohibitive. They are highly skilled individuals with a sound grasp of the financial markets, and they want to be paid for their expertise. This automatically puts them out of reach for many novice investors, but there are ways to learn from these people, through their writings, their speeches and their investment decisions. It may be best to seek out the services of a financial planner as opposed to a financial advisor since they deal with your overall finances.

Financial Planners Offer an All-Round Package

There are many reasons why you may be inclined to enlist the support of a financial planner, such as managing your debt, planning for your retirement, allocating funds towards your investment portfolio and so forth. If you opt for a fee-based financial advisor, they will take a percentage of the amount that you invest in fees. Typically, those fees can range from $2,000 per annum for a $200,000 investment portfolio to $10,000 per annum for a $1 million investment portfolio.

The fee structures will vary from one advisor to the next. Be advised that certain financial advisors may appear to offer you free services up front, but they do take commissions on the investments they sell you. It’s always a good idea to request in-depth information from a financial advisor about how their fee structure operates. Transparency is a prerequisite with respect to fees and commissions.

Once you have a financial advisor on your side, you will be able to carefully plan your financial future. There are many aspects to consider here, including investments in your 401(k), or retirement account, repayment of student debt, purchasing a property, automobile loans, managing personal disposable income, taxation-related issues and so forth. You can certainly discuss things like credit loan applications, although many of these companies and aggregator services offer comprehensive advice for free.

The rule of thumb is as follows: If you have money available for a personal financial advisor, use it. Also consider how much money you have available for investment purposes. Many of these advisors will not take on new clients if their portfolio is worth less than $100,000 to begin with anyway. You will invariably have to shop around for the best deals, and the best advisors!