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Key points

• A financial advisor can help you identify and achieve your financial goals.
• Consider hiring an advisor if your finances are complex or you experience a major life event.
• Choose an advisor you feel comfortable with and whose expertise aligns with your needs.

Hiring a financial advisor is a big decision. Not only are you inviting a complete stranger into some of the most intimate areas of your life, but you’re paying for the privilege. 

While more than 60% of Americans think their financial planning needs improvement, only 35% seek help from a financial advisor, according to Northwestern Mutual’s 2022 Planning and Progress Study.

The study also revealed how impactful a financial advisor can be, from helping clients save during the COVID-19 pandemic to making them feel like they’re on more solid ground.

Working with a financial advisor can be great, but it isn’t for everyone. Here’s how to determine if you need a financial advisor and what to look for if you do.

Do I need a financial advisor?

Deciding to work with a financial advisor is a personal choice. There is no set litmus test for whether you need one.

That said, if you have investable assets, personal and financial goals, or questions about your finances, you may want to hire a financial advisor.

If it sounds like anyone with money should work with a financial advisor, that’s the gist of it, according to Kimberly Stewart, a financial advisor at Ameriprise Financial, whose personal philosophy is “If you have money, you need a financial advisor.”

“Your finances are too important to leave to chance,” Stewart said. “Understanding money and its applications are paramount to achieving financial success.”

If you already possess that understanding and feel confident in your financial plan and ability to manage your money throughout life’s ups and downs, you may be fine on your own. 

Still, you might want to engage a financial advisor for a second opinion and to ensure you’re on track to reach your goals.

At the end of the day, a financial advisor’s job is built around offering counsel and actionable guidance. 

“If you’re the type of person who’d feel more confident and in control of your finances if you had someone to gut-check decisions and plans with, working with a financial advisor may be a smart move,” said Manuel Alvarez, a senior wealth advisor at Citi International Personal Bank U.S.

You may also want a financial advisor for peace of mind.

If money creates anxiety for you and you worry about your financial future, an advisor can help you understand your situation and suggest actions you can take to boost your financial confidence. 

When it makes sense

Just like there’s no set litmus test for whether you need a financial advisor, there’s no definitive answer to the question of when you should hire one. But certain situations tend to benefit from financial advice.

Experts say it makes sense to hire a financial advisor in the following circumstances:

• You don’t have the time or inclination to manage your finances.
• You experience a major life event, such as a marriage, divorce, loss of a spouse, birth of a child, relocation or change in your employment status.
• Your financial situation changes, such as receiving an inheritance.
• Your financial situation becomes more serious and the cost of a financial mistake more costly.

“When we begin our careers, our finances can be comparatively simpler than when our families grow, our income grows and life becomes more complex,” said John Diehl, senior vice president of applied insights at Hartford Funds. This is when getting financial guidance can make sense.

While a major event could be the impetus for hiring a financial advisor, Alvarez recommended finding one before life gets crazy. 

During busier and more stressful moments, you may feel rushed to choose an advisor and not deliver yourself sufficient time to vet candidates. 

“As many advisors like myself can attest, it’s during those quieter times that you’re more likely to provide an accurate financial picture and, in turn, help your advisor get a clearer sense of your goals as well as any potential pain points and opportunities,” Alvarez said.

Then, when life gets hectic, you’ll have someone in your corner to help.

Financial advisor vs. financial planner

A follow-up question is what type of professional to hire. You’ll most likely encounter two job titles: financial advisor and financial planner. While the terms may be used interchangeably, they describe different types of financial professionals, each providing unique guidance.

“A financial advisor typically focuses on a specific area of your finances,” Stewart said. “Conversely, a financial planner typically helps clients with a more holistic, comprehensive approach that encompasses several aspects of one’s finances, such as budgeting, savings, investments, retirement planning, insurance planning and estate planning.”

Another potential distinction between a financial planner and a financial advisor is the compensation model:

• Financial planners are more likely to be paid a percentage of the assets they manage for you.
• Financial advisors are more likely to be paid through commissions on the products they sell you.

Understanding these points is more important than what a financial professional chooses to call themselves.

Questions to ask a financial advisor

Once you decide to hire a financial advisor, it’s time to begin the interview process. 

You may want to meet several professionals to compare their services and fees. Questions to ask before hiring a financial advisor include the following:

• What services do you offer?
• What is your investment philosophy and strategy?
• How are you compensated, and how much will it cost me to work with you?
• How will we work together?
• Do you specialize in any areas of financial planning?
• How is your business structured? Do you work as part of a team or are you a solo practitioner?
• Who will be my primary point of contact with your office, and how will we communicate?
• What is your professional background?
• What credentials do you hold?

Ultimately, while titles and certifications matter, it comes down to whether you feel comfortable working closely with the financial advisor long term. Ask yourself if you trust them and believe in their ability to responsibly manage and grow your wealth. If the answer is anything other than a resounding yes, keep looking.

Tips for choosing a financial advisor

When choosing a financial advisor, consider the following expert tips.

1. Tap your network for recommendations

Your network is a great place to begin looking for a financial advisor. It can include your friends, family, colleagues and neighbors. The best recommendations often come from people whose financial situations resemble yours or who share similar financial goals.

But don’t take a recommendation at face value. “Play the field and meet with multiple candidates to see who you mesh with,” Alvarez said.

2. Identify the factors that are most important to you

Ask yourself what you want most in a financial advisor. What would your ideal advisor be like? 

You might prefer working with a financial advisor whose background is similar to yours. For instance, Alvarez speaks Spanish and finds that many of his clients whose primary language is Spanish appreciate being able to communicate that way.

3. Find someone who listens

You could be working closely with this person for decades to come, so it’s crucial that you feel comfortable with them. Ask yourself if the advisor is receptive to your personal and financial goals and confident in their ability to create a financial plan to help you achieve them. 

4. Vet their background

Personality traits are important, but so are professional qualifications. “You will want to know about their background, their expertise and if they often work with clients in similar circumstances to yours,” Diehl said.

You can check an advisor’s credentials and disciplinary history using the Financial Industry Regulatory Authority’s BrokerCheck tool or the Securities and Exchange Commission’s Investment Advisor Public Disclosure website. 

The former is often used by financial advisors working at broker-dealers, while the latter is likely where you’ll find financial planners working at investment advisory firms. If the professional isn’t listed on the first site you check, try the other.

My relationship with money has been one of intimacy. From the moment I began earning it, I preferred to keep my precious dollars where I could see them: easily accessible in my wallet or a bank, no cent left unaccounted. I probably would’ve stored all of my money in a sock under my mattress if such a practice wasn’t frowned upon. It should come as no surprise that I did not have a retirement account nor a credit card until well into my 20s.

Recognizing my relatively unsophisticated attitude toward saving, my tax preparer suggested I work with a financial planner in 2020. I wasn’t the stereotypical high-earning professional who I suspected frequented these financial experts; I was a full-time freelancer, one who did not make a ton of money, at that. But I wasn’t saving for retirement. Whatever cash I did have in savings wasn’t earning any interest.

Three years later, I have a SEP IRA, a brokerage account — both set up and managed by my financial planner — and a home, whose down payment came from the funds (and accrued interest) from the brokerage account. While I am still far from the savviest with money, working with a financial adviser helped bolster my confidence. If you’re considering the assistance of an expert when it comes to your cash, here’s what I wished I knew before sitting down with a financial planner myself.

What do financial planners do?

There are two commonly used terms for financial professionals: financial advisers and financial planners. Financial adviser is a generic term for anyone who gives financial advice, says wealth adviser and certified financial planner Leo Chubinishvili. Financial advisers could be insurance brokers, stock or bond brokers, or a financial coach.

Financial planners look at a client’s finances more holistically and help them manage their money and set financial goals for the future through detailed plans. They can assist with investing, retirement planning, life insurance, and budgeting. They are often certified by the CFP Board and will have passed an exam. “Some people may not know what to do with their money,” says Elizabeth Ayoola, a personal finance expert at NerdWallet. “That’s where a financial planner can come in and guide you along that process and deliver you advice about how to invest, advice on how to protect your money.” Ayoola recommends working with a financial planner over an adviser.

The financial planners will look at their client’s cash, assets, debt, and budget, ask them what their goals and values are, evaluate their financial well-being, and develop a plan, which may include investment, retirement savings, or life insurance planning. They’ll provide specific recommendations like “your investment portfolio should be invested this way because your time horizon is this long and your risk tolerance at this level,” Chubinishvili says. Financial planners will then monitor the plan and suggest adjustments based on changing goals and life circumstances, like buying a house, having children, or even, in my case, a pandemic. You’ll deliver them access to bank accounts to make trades or move money into different accounts.

Do I need a financial planner?

Perhaps you aren’t sure what your financial goals are or, like me, feel you don’t make enough money to warrant paying a pro for assistance. If you’re young and have fairly straightforward financial goals, like saving for retirement and have a retirement plan through your employer, you might not need to work with a financial planner, Ayoola says. Maybe you don’t want to actively invest and are looking for a lower-cost option. Robo-advisers — an automated digital investment platform, like Betterment and Wealthfront — can also be a good option, according to Ayoola. “You can put in what your goals are, what you want to achieve, and it automates everything for you and does all the work for you,” she says. “For people who don’t want to stress, don’t want to think about or keep checking their portfolio, robo-advisers can be a great alternative.”

But for people who are closer to retirement, have more complex finances (maybe you’re a freelancer or are combining finances with your spouse), or need a little assistance investing, a financial planner can help. “It’s not always just about having money,” says certified financial planner Stacy Miller of Bright Investments and a member of the National Association of Professional Finance Advisors Advisor Bureau. “It’s about a prospect not having the knowledge that they need. They need the advice. They need the expertise and the experience, and the planner is going to show them how to get that future financial security.”

Age and income shouldn’t deter anyone from working with a financial planner. While most of his clients are older, Chubinishvili recently began working with a woman in her early 20s, developing a plan to allocate money to retirement savings, another savings account, and a brokerage account.

How do I find a financial planner?

Experts agree the best way to find a financial planner is through a referral. Ask your family and friends if they work with a pro they’d recommend. My accountant referred me to my financial planner.

You can also search for a certified financial planner via online directories of CFPs or other financial advisers to find one near you, though some may work with clients remotely, too.

To help narrow down a search, decide if you want to work with a planner of a specific race, ethnicity, or gender. Always read reviews and check their qualifications as well: that they’re, ideally, a CFP, that they don’t have any disciplinary actions against them, and their investing strategy. You can find this info online by searching the individual and the firm on the Financial Industry Regulatory Authority’s BrokerCheck program and the Investment Adviser Public Disclosure website.

Chubinishvili suggests working with a financial planner who is a fiduciary, meaning they have a legal responsibility to act in your best interest, not their own. If you can’t determine if they’re a fiduciary from their website, just ask them. Chubinishvili also recommends independent advisers who don’t work with bigger companies who may have products or services they’re trying to sell.

Before entering into an agreement with a financial planner, schedule an introductory call to determine their style and whether it aligns with your goals — and your gut feeling. Ask them about their investing philosophy and how they’ve worked with other clients. After your first meeting, evaluate how well they were able to answer your questions or break concepts down into digestible terms. Did their investment strategy align with your financial goals? Do they have a process for ending relationships with clients? Can you trust and connect with them? Because they have access to your money, this should be a person you can have faith in.

How do financial planners get paid?

Financial planners get paid in one of two pay structures: fee-only and commission-based. Fee-only planners charge a flat fee for an hourly rate or a consistent percentage of the assets they manage for you, Ayoola says. Commission-based planners earn money when they sell a product, like insurance packages and mutual funds. “That can add up over time,” Ayoola says, “and the ideal thing is to keep costs low, because that money that you are paying extra on commissions could go towards investing or saving.”

Some financial planners may say they are “fee-based,” which Miller says is not the same as fee-only. Fee-based advisers may charge a flat fee but they can also receive commissions. “which means that the likelihood that they are also a fiduciary is very unlikely,” she says. “It’s hard to do what’s in the best interest of your client if you’re getting commission for making that choice.”

How involved should I be with my financial planner?

Your financial needs will dictate how often you’ll want to meet with your planner. If you’re nearing retirement or you came into an inheritance, you might want to meet with your financial planner more than someone who is at the beginning of their career and wants to start investing, Ayoola says. At the minimum, you should check in with your financial planner once a year to review your investments, budget, and how close you are to meeting your goals.

If you’re a more hands-off client, you can choose a financial planner solely for their advice, not the implementation of it, Miller says. “They say, here’s your advice, here’s what you need to do for investments, for retirement, or tax planning, estate planning.” You take that advice and run with it.

Should you want to end the relationship, check your contractual agreement with your planner to ensure you’re following proper protocol, Ayoola says. If there’s no set process, Chubinishvili says you can simply find another adviser and let your new one handle the transfer of information and accounts. You can also call your adviser and ask them to remove themselves as users authorized to move money from your accounts. “Now you just have a brokerage or retirement account,” Chubinishvili says. “And it’s self-managed.”

Just make sure you have a plan and advice for separating from your financial adviser, Miller says; you don’t want to face any taxes or penalties because you weren’t aware. For example, if you’re under 59-and-a-half years old and you pull all of your money out of a retirement account managed by an adviser you no longer want to work with, you will be taxed on that money and receive a penalty from the IRS.

Ultimately, these financial pros take a big-picture look at your financial life and goals and make suggestions based on where you are and where you want to be. Whether you’re a fledgling freelancer like I was, or an established professional with multiple investments, there’s utility in having a money person in your corner to answer all your calls and emails about interest and down payments.

Financial professionals, including accountants, are generally bullish on AI and the majority are unconcerned it will eventually replace them — however, others, especially at the entry level, might not be so lucky.

This is according to a accurate poll by Thomson Reuters, which surveyed over 1,200 professionals in law, accounting and corporate finance. It found that a comfortable majority believe that widespread use of generative AI will lead to their skills being even more highly prized than they are even now. The survey found 40% of professionals say this will happen between 18 months and five years from now; 24% of professionals say this will happen over the next 18 months.

Part of this is likely due to professionals predicting that AI can drive operational improvements. The vast majority think that generative AI will help, not hurt, productivity and internal efficiency. Tax and accounting firms say it can help them keep clients in the know, assist with client communications, and Improve their ability to put complex ideas into layman's terms. Within tax functions specifically, professionals said AI can help reduce the chance of audits and penalties through improved data quality, as well as identification of patterns that find potential risk of losses that could occur based on analysis of large amounts of data, including contracts. Other professionals cited the potential to Improve their ability to research syllabus and review documents as other positives.

This optimism can be seen in predictions that the rise of generative AI will result in new service offerings (82%) and alternative pricing models for firms (75%). The report, on this last point, said this is likely because AI-assisted work can be more easily slotted into a fixed fee arrangement. The report also predicted a decline in outsourcing: about 60% of poll respondents said the use of generative AI will mean a greater proportion of work can be done in-house; by contrast, 35% said generative AI will actually lead to fewer things being done in-house.

Despite this bullishness, though, there remains a significant chunk of professionals ranging from pessimistic to outright despondent. The poll found 33% of professionals believe the rise of generative AI will literally lead to "the demise of the profession" because their "skills [are] no longer needed." The poll found 24% thinks this will happen slowly, between 18 months and five years from now, while 9% believe this will happen fast, within the next 18 months.

The prevailing view is that the rise of generative AI will lead to more top-heavy organizations: 57% overall believe there will be a decline in entry-level positions, with 27% believing it will happen slowly (18 months to five years) and 25% who think it will happen fast (within 18 months). Conversely, 58% think the number of professionals in their own departments will likely grow; 26% believe it will do so slowly while 32% believe it will happen fast. In contrast, only 31% believe their own departments will see reduced headcount.

This might seem to imply that people believe established players will benefit from AI more than entry-level workers.

As for who will be hired in the future, many are predicting it will be people without traditional qualifications as AI opens up new career paths. The poll found 68% believe more work will be done by those without traditional qualifications due to AI, and 66% believe AI will carve new career possibilities.

FreshBooks survey

The Thomson Reuters survey lines up well with another recently released study from Freshbooks, which polled 100 accounting professionals. It found that accountants were fairly confident AI could not replace them: 70% believe that today's generative AI tools cannot match the nuanced skills of a human accountant. But unlike the Thomson Reuters survey, which saw 67% saying generative AI will have an impact ranging from high to transformational, the FreshBooks survey found only 36% anticipate a substantial impact on tax preparation, and 32% expect impacts on accounting advisory services.

The FreshBooks survey shows a large chunk of respondents, 38%, saying they anticipate that the rise of generative AI means not having to hire as many accountants. However,  57% of accounting professionals disagreed with this notion.

Michele Paiva is a financial therapist and founder of The Finance Therapist who amplifies others' financial narratives for empowerment.

A top fear for leaders and visionaries often revolves around financial failure or ruin; this can have significant consequences not only on your personal finances but also on your professional reputation and standing.

While a certain level of caution can be healthy, I've witnessed how these fears can act as blocks to success unto themselves. Most of us, if not all of us, arrive in workplaces and careers carrying the norms set up in childhood. Some of those norms make sense; some do not. Some come from places of struggle, while others come from areas of excess. Both can provide skewed ideas of money, money fear and problem-solving.

Ten Financial Fears

Let's explore some financial fears in more detail. I believe that identifying these fears that might have originated in your childhood or were projected onto you by others can empower you to overcome them and enhance your leadership skills.

1. Reputation And Image

Those in leadership or high-profile positions often fear financial failure tarnishing their image and professional reputation. While in the hospital with heart issues, I once knew a man who insisted that his family bring his laptop to him so he could still oversee his sales team. He did not want his health to get in the way of his image as a leader in sales. This workaholic was fueled by the fear of not appearing credible, competent and financially successful.

2. The Aftermath

Many people worry about the what-if of financial consequences. For instance, failing or perceived failure financially might include a loss of assets or investments. Many leaders dream of "making it" and see the material rewards as proof of that goal; failure often results in the feeling that all of the work is for nothing.

3. Expectation

If a person is an executive, they are accountable to others; they might have to answer to board members, shareholders and partners. There might be family members that are stakeholders. Failing to meet expectations can lead to a loss of trust and confidence.

4. Responsibility

Many executives, leaders and visionaries feel the weight of taking care of their employees. They worry about making poor decisions that might result in downsizing, adding to a sense of guilt and irresponsibility.

5. Legal Struggles

Financial failure is always emotional, even when it's "just business." No one wants to have legal or regulatory scrutiny, lawsuits, fines, penalties or public shame over the repercussions of their actions. I find that heavy emotions like fear are tied to all of these critical legal situations.

6. Regret

Financial failure brings with it roadblocks. These might result in what leaders feel is a cinderblock wall that prevents aspirations and goals.

7. The Future

Even more far-reaching than the direct aftermath of financial failure is worry about the future. If leaders feel that they won't reach their goals, the next immediate feeling is often hopelessness. They worry that a history of financial failures will make them less attractive to career opportunities and prospects.

8. Self-Worth

Some leaders feel that financial success is the nexus of success and personal identity. Thus, for some, any financial setback feels like a jab to their identity and self-worth. This can lead to personal crises and seep into the family life.

9. Pressure

The fear of financial failure can create pressure to maintain an unrealistic track record of consistent success. This can lead to mental challenges, health issues and other high-pressure issues.

10. The Unknown

Fear of the unknown is an unpredictable evolutionary psychology space that can create a fight, flight or fawn response. This can cause anxiety, agitation and stress. I see it resulting in leaders feeling like a doormat or being scared to take risks.

Addressing Financial Fears

Financial stress requires a multi-faceted approach. The point of this isn't to blame your past or parents; it is to become aware of it so you can resolve it. Here are a few ways to springboard some empowered healing.

• Find balance. You can't focus only on practical strategies, nor can you address only a money mindset. Well, you "can," but why make life harder? It is best if you incorporate and balance both.

• Reframe your perspective on failure. Failure is a valuable learning experience, and while unpleasant, it can help you shift to what is truly important. This mindset alone can help you take more calculated risks and embrace innovation.

• Create a strong financial strategy. You can do this by implementing financial planning, risk management and diversification. Do you have an LLC or a trust? Do you have legalities set up to protect your assets? Do you have enough insurance? Implementing a strategy can help instill a sense of preparedness and stave off financial fears.

• Develop a growth mindset. This should focus on stepping stones in professional and personal growth. Seeking support from mentors, coaches, or therapists can help you to look at long-term perspectives and reframe perceived or genuine failures.

• Prioritize compliance with laws and regulations. Don't always trust others to do this for you. Implement internal controls and seek advice from legal counsel when you have questions.

• Build a strong network. Look to actively engage in industry events in person and online. Get involved with networking programs that are both wide-net focused or niched. These opportunities can help you to learn from others, and they can enhance your credibility. This will help you to feel less stressed from financial fear.

• Diversify. Diversify not only your investments but your skillsets as well. Many people feel trapped when they are stuck in a one-trick-pony financial situation. This often happens when their skills are too niche; you'll calm some finance fear if you are able to expand your skill set.

Financial well-being is not measured only by monetary success but also by the ability to find balance, establish healthy financial habits and cultivate a positive relationship with money. Reframing financial fears as stepping stones instead of roadblocks can help to make the journey enjoyable.

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(NewsUSA) - Insurance is essential to protecting yourself. Health insurance, homeowners insurance, life insurance — all of these can protect you in the event of an emergency. However, determining exactly what type of insurance you really need, and how to budget for it, can be daunting.A CERTIFIED FINANCIAL PLANNER^™ professional can help guide you through the many insurance options, including:

Health Insurance

Health insurance is often one of the major considerations for adults in taking a job. When choosing the health insurance that is right for you and your family, consider how much you will pay each month, but also how much, if any, you will pay for copays. Health insurance plans known as HMOs (Health Maintenance Organizations) are often the least expensive and may be a good choice for single, young professionals. However, HMOs may have more restrictions on your choice of providers. In contrast, PPOs (Preferred Provider Organizations) cost more per month but allow greater flexibility and generally do not require referrals to see specialists of your choice.

Homeowners Insurance

Homeowners insurance is part of buying a home. Homeowners insurance will cover catastrophes such as storm damage, so it is important to be familiar with the terms of your policy. Note that most homeowners policies do not include flood insurance, which can be purchased through the federal government's National Flood Insurance Program. In the event of a catastrophe, hold off on permanent repairs until your insurance company has inspected the property and you have agreed on the cost. You may need to make temporary repairs to prevent further property damage. If so, document these repairs and inform your insurance company.

Life Insurance

When considering life insurance, there are two basic types to choose from: term life or whole life. Term life insurance is set for a specific time period (or term) and often is more affordable. Term life insurance can be renewed every year or discontinued when you think you no longer need it. If you have a more permanent need for life insurance, a whole life policy that includes a death benefit and cash value can provide a sense of security for you and your family.

Taking smart steps to make sure you have the insurance you need can protect your family and property in the event of an emergency. Although insurance is not a glamorous topic, storms, injuries or other unforeseen events could severely impact your finances and your life. A CFP^® professional can provide advice on what types of insurance coverage may be necessary and how to align insurance needs with your overall financial plan.

Visit letsmakeaplan.org to find a CFP^® professional that can help you today.