July 13, 2024

Brad Marolf

Business & Finance Wonders

Here’s who does not need to work with a financial adviser

Here’s who does not need to work with a financial adviser

MarketWatch has highlighted these products and services because we think readers will find them useful. We may earn a commission if you buy products through our links, but our recommendations are independent of any compensation that we may receive.

There’s no doubt that working with a financial adviser can be helpful to some, even those who are experienced investors. “The financial markets change by the second, new products are available each day and regulations adjust frequently — it can be helpful to work with an adviser to ensure you are up to speed,” says Tiffany Lam-Balfour, investing spokesperson for NerdWallet, who adds that even seasoned investors often want someone whom they can bounce ideas off and help them make informed investment decisions.

But you’ll pay for that advice. Many financial advisers charge a fee based on how much money they manage for you, often ranging from 0.25% to 1% of assets under management per year; others charge hourly fees. In both cases these can add up, and, while they are worth it to many people, for some people, they are not.

Here’s who likely doesn’t need a financial adviser.

Money doesn’t stress you out much

Those who are constantly stressed about money have the most to gain working with an advisor, says R.J. Weiss, founder of the Ways to Wealth personal-finance site — indeed a financial adviser’s fee can be worth it if it keeps you from panicking about money all the time. “A common misbelief is that only high-net-worth individuals should seek an adviser. Yet, with so many affordable options today, what’s far more important than net worth is the level of stress someone has with money,” says Weiss. (You can use this tool to get matched with a planner who meets your needs.)

You’re already managing your money successfully

Weiss notes that our past behaviors can tell us a lot about whether we need an advisor or not. “Someone who has spent time in the past educating themselves about personal finance is more likely to do it in the future,” he explains. So if you’re someone who has been up on the latest with money, and how best to manage it, this is a good indication you might be able to do it alone. And, he adds: “When someone is considering working with a financial adviser, it’s important to look at what behaviors lead them to where they’re at currently. If they’re confident they’ve done a good job themselves [in the past] and don’t find themselves stressed, a DIY approach is likely best.” 

You don’t panic in a crisis

If you’re the kind of person who sees markets go down and immediately thinks he needs to park all his money under his mattress, a financial adviser may be able to provide a calming influence that can save you money. Grace S. Yung, a financial planner at Midtown Financial Group, notes that many times “people who panic when the market pulls back are folks who don’t have a plan and are therefore reactive and make knee-jerk decisions.” That’s one of the key things a financial adviser can do for you: make a plan that can account for volatility, and then help you calmly adjust it according to life goals.