When is the best time to hire a financial advisor?

Despite positive economic indicators — like near-record low unemployment and healthy job growth — many Americans still grapple with financial worry. 

More than half (56 percent) of Americans in the workforce think they’re behind where they should be with their retirement savings, according to a recent Bankrate survey. And while inflation is well-below its 9.1 percent high in June 2022, 60 percent of workers believe their incomes haven’t kept pace with their household expenses due to inflation.  

These uneasy feelings stand in contrast to rather positive economic trends. The unemployment rate stood at 3.7 percent in January, while the Bureau of Labor Statistics reported the addition of 353,000 new jobs that same month, exceeding expectations. The S&P 500 benchmark index also reached a record high in January. 

While the overall economy might be humming along, it feels like a bumpy, uncomfortable ride for many Americans. Getting expert guidance during uncertain times is one way to gain insight about your own financial situation and how it relates to the broader economy. 

Whether it’s navigating investment options in a bull market or managing debt amid high interest rates, an advisor can bring clarity and personalized strategies to your finances. 

“The purpose of the financial advisor is to help clients unlock the next stage of their financial lives,” says Lindsey Young, a certified financial planner and founder of Quiet Wealth. 

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 What’s the best time to hire a financial advisor? 

There’s no single perfect moment to hire a financial advisor, but seeking professional guidance can be especially valuable if you feel overwhelmed by financial decisions or experience a significant life change. 

“One of the best times to hire an advisor is when you’re starting to feel like you’ve done everything you know how to do and are wondering if there are other things you should be doing,” says Amy King, a certified financial planner and founder of Inner Financial Planning. 

Marriage, divorce, a job change, a recent inheritance or a growing family can significantly impact your finances. An advisor can adjust your financial plan and help you avoid costly pitfalls along the way. 

“When the stakes are high, it makes the most sense to hire an advisor,” says Justin Pritchard, a certified financial planner and practitioner at Approach Financial Planning in Montrose, Colorado. “For instance, if you’re getting ready to retire, the decision really matters,” 

Likewise, if you’re feeling overwhelmed by complex financial decisions or unsure about specific investment strategies, tapping the expertise of an advisor can be a smart move. 

“During periods of market volatility, having a financial advisor can provide reassurance and help you make informed decisions about your investments,” says Sue Gardiner, a certified financial planner with South County Wealth Planning. “While we can’t predict the future, we can offer perspective and expertise to guide you through turbulent times.”

What does a financial advisor do?

A financial advisor assesses your entire financial situation, including income, expenses, assets and debt. Based on your goals and risk tolerance, they create a personalized roadmap to achieve your financial goals.

An advisor can explain complex concepts in understandable terms, helping you make decisions about your money with confidence. They’ll stay updated on financial trends and regulations, and answer any questions you have along the way, 

You can hire a financial advisor for a one-time meeting, or to actively manage your entire investment portfolio. Some charge an hourly flat rate while others charge a percentage of the investments they manage for you. 

“You don’t necessarily need to have a significant amount of money to work with an advisor,” says Pritchard. “In fact, getting good advice early in your savings journey might make it easier to meet financial goals.”

Whether it’s saving for a down payment, planning for college or building retirement savings, an advisor can help you get on track and monitor your progress. 

 Best tips for finding a financial advisor 

When searching for a financial advisor, you’ll encounter two key terms: fiduciary and suitability. Understanding these distinctions is important.

A fiduciary is ethically obligated to act in your best interests, prioritizing your financial well-being above their own. Meanwhile, suitability means an advisor is required to recommend investments that are “suitable” for your risk tolerance and investment goals — but not necessarily the best possible option.

Always opt for a fee-only fiduciary advisor. This ensures their recommendations are solely based on your best interests, free from any hidden commissions or conflicts of interest. Fee-only advisors typically charge a flat fee, hourly rate or a percentage of your assets under management (AUM).

It’s important to compare costs when looking for an advisor, and find one who aligns with your needs and budget. You can also consider robo-advisors for automated investment management at lower fees, though they may not offer personalized guidance.

Once you have a shortlist of advisors, compare their qualifications, experience and fee structures. Schedule initial consultations with at least three advisors to gain a sense of their communication style, investment philosophy and how they approach building client relationships.

And don’t hesitate to ask detailed questions during consultations. Here are a few questions to get the conversation going. 

Bottom line

An advisor can be a valuable resource for navigating your financial journey, especially when you’re feeling uncertain or facing a major life change. Their expertise and guidance can help you make informed decisions, reduce stress and achieve your financial goals with more confidence.