What advisors say clients value most, and how to decide if professional advice is right for you.
What this article covers
After decades as a successful DIY investor, Opher Ganel hired a financial planner as he approached retirement, and the experience taught him what advisors are really for. Seven financial advisors explain why investment management is often the least of what they do, describe the life events where their guidance saves clients the most, and share how to tell whether you need an advisor and how to choose the right one.
Key Takeaways
A financial advisor’s biggest value is usually better decisions, not beating the market
Most advisors interviewed called investment management one tool among many. Their greatest value, they said, comes from coordinating taxes, insurance, estate planning, benefits and cash flow, and from stopping clients before they make costly, hard-to-reverse decisions.
Financial advisors make the biggest difference during major life events
Job offers, inheritances, retirement, losing a spouse and selling a business are the moments advisors cited most. Examples include negotiating an extra $850,000 of RSUs, steering a client away from a job whose health plan would have cost $30,000 to $40,000 more in medical expenses, and timing a retirement to push a six-figure deferred compensation payout into a lower-income tax year.
Choose an advisor by services, compensation and fiduciary duty, not by title
Advisors differ widely in what they do and how they are paid (fee-only, fee-based or commission-based). Ask how they are compensated, whether they act as a fiduciary at all times, and how they actually spend their week, since job titles and website service lists can be misleading.
Ben Simerly
JT Belnap
Shai Gothreau
Nick Garofalo
Tushar Kumar
Larry SprungFor decades, I was an avowed financial DIYer.
Overall, it worked well. I recently mostly retired at age 63.
That’s certainly not “early retirement,” but it’s much better than reaching retirement age and realizing you can’t afford to stop working.
Then I realized something that should have been obvious.
I’d never retired before.
My decades of experience were in building wealth, but I had no experience turning it into retirement income.
I wasn’t worried about the things I knew.
I was concerned that I might get bitten by things I didn’t know that I didn’t know. So, I decided to hire a financial planner to double-check my assumptions and projections.
My experience, as I’ll get to below, was mixed and taught me almost as much about financial advisors as retirement planning itself.
Why a Lifelong DIY Investor Finally Hired a Financial Advisor
If you ask people what financial advisors do, they’ll most likely say they do the following:
- Tell you that you need far more money to retire than you thought.
- Manage investments that don’t beat the market.
- Charge more than they’re worth.
Setting aside the somewhat snarky commentary, thinking that advisors put together a retirement plan and manage your investments isn’t wrong.
It’s just far from complete.
That, along with the snarky parts, leads many people to conclude they probably don’t need a financial advisor or, at least, that the benefits wouldn’t justify the cost.
That’s especially true for DIYers who, like me, have managed their own investments successfully for years or decades.
However, as mentioned above, this picture is far from complete.
To address that, I asked advisors to explain their work in plain English and describe where they provide the greatest value to their clients.
While most mentioned investment management as a part of their work, the real value they identified was elsewhere. They shared helping clients navigate major financial decisions, coordinating different aspects of clients’ financial lives, and avoiding expensive mistakes that have little to do with investment selection.
As Ben Simerly, CFP®, Founder of Lakehouse Family Wealth, says:
There’s a significant misconception that advisors sit and stare at the stock market and clients’ investments all day. Generally, that’s not at all true.
In reality, most of our time goes towards helping clients with the questions that come up in life. Maybe it’s a child on the way and a need to build or restructure a guardianship and estate plan, insurance plan, and college plan. Maybe it’s a home purchase. Maybe it’s an illness that necessitates making some more conservative investment changes and a brand-new tax plan.
I had a client ask me once why they kept seeing ads for advisors focused on particular life events. It’s because even when someone desperately needs an advisor, they won’t hire one until a significant event causes enough pain to hire one.
Often, that’s a home sale or purchase, a promotion at work, a divorce, a death, a medical diagnosis, a marriage, etc. The two events we work with the most are retirement and women becoming suddenly single later in life. For retirement, it’s that moment where concerns over having a real plan grow enough in a couple’s minds that ‘it’s time to hire a real pro.’
After reading the following, you’ll be able to make an informed decision based on whether an advisor’s support would be valuable enough for you to hire one or not.
What Does a Financial Advisor Actually Do Beyond Managing Investments?
Many people simply assume that a financial advisor’s main contribution is managing your investment portfolio.
And given that many advisors charge fees based on Assets Under Management (AUM) or Assets Under Advisement (AUA), that seems like a natural assumption. And some advisors indeed concentrate on that aspect of your finances.
But other advisors offer comprehensive financial planning, where investments are just one part of a much broader relationship that may include:
- Retirement planning.
- Tax planning and strategy.
- Insurance.
- Estate planning.
- Cash flow planning.
- Negotiating compensation and employee benefits.
- Education funding.
- Charitable giving.
- Decision support through major financial events.
Advisors who offer the full suite of such services don’t treat each separately in a siloed manner. Instead, they examine how each decision in one arena affects all the others, optimizing your overall outcome vis-à-vis your financial goals.
For example:
- A retirement decision may have tax implications.
- An inheritance may require investment decisions while also raising estate planning and emotional considerations.
- Accepting a new job could involve evaluating salary, stock compensation, healthcare coverage, and retirement benefits, all of which affect tax and retirement planning.
Most advisors emphasized things other than investment management.
For example, JT Belnap, Founder, Treasure Valley Financial Planning, says:
What a financial advisor actually does is help you make smart decisions with your money so you can enrich your life.
That encapsulates in a single sentence the most important aspect of the value of a good financial advisor.
Shai Gothreau, Founder and financial planner at Off the Clock FP, identifies an unfortunate reality:
The biggest misconception people have about financial advisors before they become clients is that they’re a scam! Like any profession, there are good advisors and bad advisors. A good advisor will touch all areas of a client’s life and really work with them through their complexities. Investment management is a tool in a financial plan, but it’s not the only component.
He then continues to explain what advisors actually do:
When someone asks, ‘What does a financial advisor actually do?’ I always answer with ‘I help people navigate any decision that is tied to money. From investing for the first time to retirement and everything in between.’
Because I work primarily with wealth accumulators, I have some clients that I meet monthly with to review cash flow. However, I typically meet with clients towards the end of the year for employer benefit review and tax planning, and then earlier in the year to update goals and plan for the upcoming year. Throughout the year, I may have a couple of meetings if things come up that clients wish to discuss.
Gothreau addresses more misconceptions, saying:
When people think of working with a financial advisor, they usually think of investments. However, I find many clients walk away being most satisfied with the tax and estate planning. Investment management is a tool for building wealth, but tax planning focuses on strategic savings, and estate planning focuses on protecting wealth. Two areas that true comprehensive planners will dive into, which most people don’t realize, are discussed in financial planning meetings.
One thing I wish more people understood is that working with a financial advisor doesn’t mean you won’t have control over how you spend your money. We’re here to give advice and guidance on how to achieve what’s most important to you, and with that, we may identify things you’re doing that aren’t aligned with your goals. Financial advising is a collaborative process with the client(s) and the advisor, so what you get from it is only as good as the energy you put into it. Also, there are advisors out there who work with people of all income and asset levels.
Nick Garofalo, CFP® candidate, Founder & Financial Planner at Openhanded Wealth, puts it like this:
Mostly, advisors stop you from making expensive decisions at the wrong time for the wrong reasons. The investment piece, which is what most people picture, is almost the least interesting part of the job.
The real work is decision architecture: helping a household figure out what ‘enough’ actually looks like in real numbers before they spend their best years hoarding out of vague anxiety, running the second- and third-order math on a decision that can’t be undone, building one honest picture of where the money is going and where it’s headed.
An advisor’s highest-value moment usually has nothing to do with the market. It’s the conversations or questions before someone does something they can’t take back.
If you’re considering whether to hire an advisor, this may be one of the biggest distinctions. Managing investments is one thing. Avoiding expensive decisions outside your area of expertise is far more crucial.
The investment management part I was already comfortable doing and could keep doing for several more decades. It’s the other part, avoiding expensive mistakes that could creep in because I didn’t have the experience and expertise in turning a portfolio into a high-enough, sustainable retirement income stream.
As Simerly says:
The most impactful mistakes we see are those made when families are young in building wealth, and when near-retirees are making final plans in the last ten years before retirement. The broader issue is not about needing or not needing an advisor. It’s that you never know when that advice will be crucial, and families don’t know what they don’t know. We always tell clients to send us and ask us everything. Use our advice on which parts to worry about. It could be two years before the next major moment when a family needs significant help, but they wouldn’t know they needed the help unless they were meeting with us regularly, and we caught an issue that they didn’t see.
Dr. Steven Crane, Founder of Financial Legacy Builders, echoes that and expands:
People think they hire a financial advisor to manage investments, and honestly, that’s probably the least interesting part of my job. I can teach you how to buy an Exchange Traded Fund (ETF) in about fifteen minutes. What I can’t teach you in fifteen minutes is how to make a good decision when you’re scared, when you just inherited a million dollars, when you’re getting divorced, when you want to sell the business you’ve spent thirty years building, or when you’re convinced you should quit your job because you’re burned out.
That’s where a real advisor earns their keep, because money is almost never the problem. The decisions people make around money are. I actually think the financial industry has done itself a huge disservice by convincing everyone that our value lives inside a portfolio.
It doesn’t. Portfolios are everywhere now. Technology can build one, AI can build one, heck… your brother-in-law probably thinks he can build one. What people really need is someone willing to look them in the eye and say, ‘I think you’re making a mistake,’ and then explain why.
Often, the best financial advice I give has absolutely nothing to do with the stock market. Sometimes it’s telling someone not to retire yet because they hate their boss, not because they can actually afford to retire, or telling a business owner not to sell because they’re exhausted instead of fixing the business first.
We don’t just manage money. We help people make better decisions, and over a lifetime, those decisions are worth a hell of a lot more than whether your portfolio beat the S&P 500 by a percentage point.
It’s having a partner helping me make the best decisions possible that led me to my decision to hire an advisor, and may make it worthwhile for others to consider.
Simerly explains:
The biggest misconception is that all advisors are here for investments and commissions.
Unfortunately, there is truth behind that idea. What most don’t know, however, is that there is a growing community of advisors building practices that focus on the entire financial picture, from car insurance to estate planning. And without pushing commissionable products. Modern advisors are here to be your family financial consigliere, your head football coach, and your mission control. We help guide the entire picture, and investments are one piece of that puzzle.
These advisors all describe the advisor-client relationship as providing an experienced partner when major financial questions arise. Clearly, they don’t view themselves primarily as investment managers. They see their greatest value-add as helping clients make better financial decisions over years and decades, where managing investments is just one, albeit important, tool among many.
Table 1 captures the main things advisors can do for you.
All this naturally raises another question.
If advisors create value in ways that extend well beyond investment management, when do people benefit most from working with an advisor?
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When Does a Financial Advisor Make the Biggest Difference?
If you haven’t hired a financial advisor yet, odds are that you won’t see the need tomorrow or the day after, unless something different happens.
For example:
- You get a job offer with a complicated compensation package.
- Your parents leave you a large inheritance that you’re not sure how to best handle.
- You start seeing retirement as something that could happen in the next few years and realize, like I did, that you’re not confident you know everything you need to know to succeed at it.
- Your spouse passes away.
- You own a business and start wondering if it’s time to sell.
- You need to make significant decisions about healthcare coverage, taxes, or housing that could affect you for years or decades.
These sorts of moments are when life stops you short and shows you that you need to make financial decisions with potential long-term consequences, good or bad, that you need to get right.
None of this implies that anytime you face a major financial decision, you have to have a financial advisor’s support.
Many people regularly handle many such decisions well enough on their own, especially if the decision at hand is one like others that they’ve handled well before and have the knowledge, experience, interest, and confidence to do their own research.
The situation changes when the right answer isn’t obvious, the stakes are high, and/or the emotional weight of the decision makes clear thinking harder.
Table 2 captures some of the most impactful life events when a financial advisor’s support can make a big difference.
The examples shared by advisors reiterated how the greatest value they feel they offer clients has little to do with investment portfolio performance.
One example shared by Belnap was especially striking.
He says:
One example where we made a meaningful difference beyond investment performance was for a lady in her 70s who recently lost her husband and was down at a car dealership. She called us to see if she was getting a good deal. We left our office, drove over there, and helped her negotiate the car deal. It saved her a couple of thousand dollars, but more importantly, she felt protected and like she had a team that truly cared about her.
In today’s transactional, impersonal world, having a financial advisor drop everything and rush over to a dealership to help a widow is both surprising and heartwarming.
Another advisor, Tushar Kumar, Founder, Twin Peaks Wealth Advisors, shared how he helped a client substantially increase their equity compensation:
One situation where our work made a meaningful difference for a client that had little or nothing to do with investment performance is when we help our clients negotiate job offers or raises. Because of how familiar we are with certain companies’ pay bands, we were recently able to help a client negotiate an additional $850,000 of RSUs.
Sometimes, the biggest difference an advisor makes isn’t in increasing compensation, but rather in avoiding a potentially big problem, as Simerly shares:
We had a new client come in who was in the process of talking to a recruiter for what he thought was a promotion. We got a call from the husband just before our third meeting with the family, letting us know he took the new job, and the health insurance was ‘cheap and comprehensive.’
The new health insurance turned out to be a blatant bait-and-switch coordinated between the employer and the recruiter. With the family’s medical needs, we calculated that the family would incur an additional $30,000 to $40,000 in medical expenses with the new employer, and the new pay bump wouldn’t begin to cover it.
Unfortunately, that is not a typo. We coached the husband on going back to his prior employer, making amends, and asking for his job back. Fortunately, they were thrilled to have him back. But something as simple as a promise from a recruiter could have changed that family’s entire financial life for years to come.
Financial advisors are especially helpful when we’re emotionally overwhelmed.
Gothreau shares:
I had a client who came to me with an inherited IRA from their late father. They wanted expertise on the rules and advice on how to invest it.
While that was certainly discussed, what led to a bigger conversation was the emotional aspect of this inheritance. They were up against the year-end clock to take Required Minimum Distributions (RMDs) but struggled with withdrawing money from an account their father left them. They were worried they would spend it on something that their father wouldn’t like.
We spent a lot of time discussing not only her values but also her father’s. We ultimately decided that we would use some of the money to fund my client’s business that was just getting started and the rest for long-term investing.
I’m grateful that my client felt comfortable opening up to me about the emotional toll this inheritance had on them, and we were able to come up with a solution that worked financially and emotionally.
Lawrence D. Sprung, CFP®, CEPA®, Founder, Wealth Advisor at Mitlin Financial, Inc., shares another example of a simple bit of advice that saved a client a large tax bill. He says:
We worked with a family where the husband was looking to retire in the third quarter of the year. This would have triggered a large six-figure payment from his deferred comp plan before the end of the year, which would have been added to his taxable income, which was already substantial since he worked most of the year.
By advising him to delay his retirement by a few weeks until the end of the first week of December, he was able to defer that large payment until Q1 of the following year, when he would not have earned income because he would be officially retired. This move saved him a great deal of taxes that would have been owed, simply by delaying a few days.
Sprung sees such tax strategy advice as a major value-add, saying:
Tax planning is an area where financial advisors can add tremendous value. In some circumstances, the right tax planning can offset a good portion of the cost of using the advisor, if not more.
As these examples demonstrate, the question “What does a financial advisor do?” is far too narrow.
A better question could be, “What decisions that I face will become easier, clearer, more beneficial, or less costly with experienced guidance?”
For some, there may only be a few such decisions over a lifetime.
For others, especially if you have complicated finances, business interests, stock compensation, a blended family, tax issues, or major transitions ahead, consequential decisions like these could come up much more regularly.
The thing to note is that money decisions are often not (just) about the numbers.
They often involve emotions, family dynamics, couple power struggles, incomplete information, and consequences that may be less than obvious and feel overwhelming.
That is where experienced advice can make the biggest difference.
Do You Need a Financial Advisor, or Can You Do It Yourself?
Now that you know more about what financial advisors can offer, beyond managing your investments, it’s time to ask if you actually need one.
The answer is, like most of personal finance, very personal.
You may be early in your career, with simple finances, manageable (or even no) debt, a workplace retirement plan, consistent savings and investing habits, and no major decisions on the horizon that go beyond your comfort level. In such scenarios, your answer is very likely “No,” or at least “Not yet.”
You most likely can DIY things, as I did, for a long time.
Or, you may have a far more complicated financial picture, full of uncertainty, competing priorities, and consequential decisions to make that you’re not sure you know how to make most optimally.
Those complexities and uncertainties can take many shapes.
- You may be nearing retirement.
- You may be expecting a significant inheritance.
- You may own a business.
- You may need to negotiate stock compensation.
- You may be navigating complex and high taxes.
- You may be supporting aging parents and possibly dependent children at the same time.
- You may be blending families as you enter a second (or third…) marriage.
- You may be planning to have (more?) children.
- You may need to decide soon when you should claim Social Security retirement benefits.
- You may need estate planning.
- You may need to manage cash flow while balancing competing goals.
In that sort of situation, you may well benefit from not going it alone. A financial advisor may be especially helpful when you need to make decisions that are hard to reverse, difficult to evaluate objectively, and/or likely to affect multiple parts of your financial life.
As Garofalo says:
The people who need an advisor most are usually the ones who are convinced they don’t. They’re competent, they’re earning real money, they have spreadsheets or tools, but much of their financial life runs on instinct and good intentions. Income is good, goals are semi-opaque, savings are growing-ish, but nothing feels coordinated. Priorities compete without a system to referee them.
It’s usually a pain point acting as a forcing function: a job change, a windfall inheritance, a crisis, a debt-free moment followed immediately by ‘now what?’ People call when something has changed, and the old approach, which was often deferral, doesn’t work anymore. The unfortunate truth is that the conversation they need usually should have happened eighteen months earlier, before the decision was already half-made.
Gothreau points out that you don’t need to be a millionaire, but you do need to be open to guidance, willing to be transparent, and ready to act on advice. He says:
Despite most firms’ setup, you don’t need millions in invested assets to work with a financial advisor. I find the best people to work with are people who are open-minded to the process. Someone who is seeking guidance, open to new ideas and perspectives, and ready to take action.
This can be people who are fresh out of college looking to build a strong financial foundation, busy professionals, pre-retirees, and retirees. If someone is not willing and open to feedback and making changes in their financial decisions, they may not be ready to work with an advisor.
I work primarily with busy professionals who are in their wealth-accumulating years. Typically, I find these people seek professional advice when they no longer want the stress of navigating their finances on their own. Additionally, I’ve found events such as an inheritance to be a trigger for this demographic to reach out to a professional.
Belnap agrees:
The ones who will most likely benefit from working with a financial advisor are those people who are willing to be transparent about their life and financial situation and don’t want to do things themselves. They want to have a team. And the ones who reach out more to solicit advice will benefit even more, because most advisors give their clients unlimited access.
None of this means that everyone needs advice.
As Garofalo says:
The people who genuinely don’t need an advisor yet are early-career, low-complexity, no major decisions on the horizon, and an honest advisor should say so in the first meeting rather than sell them a plan they’ll never open.
Simerly, on the other hand, argues that everyone can benefit from professional advice. He says:
I am a firm believer that everyone needs an advisor. It’s more a matter of how often they need one, and for what reasons.
For example, the counseling and education we provided to many of our clients’ children after they graduate from college has probably made them, or saved them, thousands or even millions of dollars in the future, simply by avoiding early mistakes. But those adult children in their 20s don’t need to meet with us very often.
Those views are not necessarily contradictory.
Even if you can benefit from professional advice, not everyone needs the same level of support. You may benefit from an ongoing advisory relationship right now, and for the rest of your life, because your financial life changes frequently or is becoming more complex with no relief from that in sight. In this scenario, regular planning can help make all the small and not-so-small decisions across taxes, benefits, insurance, investments, and estate planning interact in ways that are difficult to see alone.
Or, you may just need a one-time plan with updates on an as-needed basis or targeted guidance around one specific decision.
The question you’d most benefit from addressing is “Would an experienced advisor help me make better decisions than I would likely make on my own, given my current situation, upcoming decisions, and willingness to follow through?”
If your answer is, “Not really,” you can probably go it alone, at least until the situation changes.
If your answer is, “Actually, yes,” the helpful thing to do next is to understand how to choose the advisor who’d be your best fit.
How to Choose a Financial Advisor: Services, Fees, Fiduciary Duty and Fit
When I realized it was time for me to hire a financial advisor, I started with a flat-fee advisor firm recommended by a famous financial author (who will remain nameless for reasons that will be clear in less than a second).
That advisory firm failed miserably.
The planner they assigned to us told me that what I saw on their website was different from what he put in. When I complained about that, rather than promising to fix it ASAP, they offered me a full refund of the multi-thousand-dollar fee.
I took them up on it.
Then, I followed a recommendation from a high-net-worth-plus group and hired another flat-fee firm.
What followed was another experience in frustration. That firm’s software wasn’t broken, but it certainly left a lot to be desired, as did their advice.
Finally, I hired a financial advisor I’ve long interacted with online, who seemed both highly knowledgeable and on the same wavelength as I am, both when it comes to investing and even more so regarding other financial matters.
The lesson to be learned here is twofold.
First, you need to decide which type of advisor is best for your individual needs and goals.
Only after that will it be time to pick among the advisors who fit that bill.
That’s because not all advisors provide the same services, work with the same types of clients, or get paid in the same way. Some advisors specialize in investment management. Others offer broader support across many aspects of financial planning. Some specialize in helping retirees, business owners, physicians, tech employees, young families, widows, divorcees, or people with stock compensation. Some work on an ongoing basis, while others may offer hourly or project-based planning.
Sprung speaks to that:
One of the biggest misconceptions people have about financial advisors before they become clients is that all advisors are the same; they are not. You need to understand what the advisor you are looking to work with will be doing for you. The services differ greatly from one advisor and firm to another.
Before you start looking for a specific advisor, make sure you understand what you need, and only look at advisors who offer the right services and support.
A few things are important to understand.
What Is a Fiduciary Financial Advisor?
First, what’s a fiduciary?
According to the Wall Street Journal, “In the context of financial advising, a fiduciary is required to put their clients’ interests ahead of their own when making recommendations. For example, a fiduciary financial advisor can’t recommend one financial product (such as an investment) over another just because it would earn them a higher commission.
“Some financial professionals are required to act as fiduciaries. Registered investment advisers (RIAs), for example, are required by the Securities and Exchange Commission (SEC) or their states to act as fiduciaries. Certified financial planners (CFPs) are also held to a fiduciary standard by the CFP Board.”
Having an advisor who’s a fiduciary handles many conflicts of interest, establishing an important standard. You can also look at an advisor’s credentials, such as Certified Financial Planner (CFP®) certification, which comes with a code of conduct, and check an advisor’s background through tools such as the Financial Industry Regulatory Authority (FINRA) BrokerCheck or the CFP Board’s verification tool.
Fee-Only vs. Fee-Based vs. Commission-Based Advisors
How an advisor gets paid is also important.
There are several ways advisors may get compensated for their work, and it’s worth paying attention to.
- Fee-only: Don’t receive any commissions for product sales. They charge clients directly for services, through a flat fee, an hourly fee, or an AUM or AUA fee. According to The National Association of Personal Financial Advisors (NAPFA), “NAPFA’s position is that the Fee-Only method of compensation is the most transparent and objective method available. This model minimizes conflicts and ensures that your financial planner acts as a fiduciary. Fee-Only planners are compensated directly by their clients for advice, plan implementation and for the ongoing management of assets. All NAPFA members are required to work only within the Fee-Only structure, accepting no commissions for their work.”
- Fee-based: Charge clients directly for services, through a flat fee, an hourly fee, or an AUM or AUA fee. However, they may also be compensated through commissions for selling investments or accounts. Depending on the capacity in which they’re acting, the standard of care may differ, and they may at times not act as fiduciaries, possibly acting under the less stringent suitability rule. That’s why it’s important to ask whether your advisor will act as a fiduciary when providing advice, how they’re compensated, and what conflicts of interest may exist.
- Commission-based: Earn commissions for selling financial products and accounts to clients. This tends to incentivize more transactions. These advisors are also held to the suitability rule, which is less stringent than being a fiduciary.
The way an advisor gets paid and the standard to which they’re held are important considerations when choosing what sort of advisor you hire.
Gothreau explains:
Clients should always ask the advisor they’re meeting with how they get paid and what conflicts of interest, if any, there may be. Just going off the advisor calling themselves a ‘fiduciary’ is not enough. Additionally, they should ask about the advisor’s investment philosophy, what the onboarding period looks like, and ongoing support. Picking an advisor is like picking out a doctor; you wouldn’t go to a cardiologist for a foot problem, so asking the advisor and interviewing for one that specializes in your financial needs is important.
Simerly offers a different take:
A heated issue with advisors has become whether or not they make commissions. The way people shop for this is by only looking for advisors who are what’s called ‘fee-only.’ The catch? Fee-only advisors can use that title only by excluding significant services, such as various types of alternative investments, 529 plans, etc. They can provide high-level advice but cannot work with them directly. The most important thing, no matter who you choose, is that an advisor is there for ongoing advice, not for sales, no matter the arrangement. Those little questions that come up in life can be far more impactful than which index fund to use. In our opinion, comprehensive, ongoing advice is more important than investments.
Table 3 offers several questions you should ask before hiring a specific advisor.
Why Trust and Fit Matter as Much as Credentials
Working with a financial advisor isn’t just about technical matters and numbers.
You’ll be baring your financial soul to them.
You’ll share retirement fears, aging and dying parents, issues around minor and/or adult children and your possible support for them, inheritance, debt, spending, business stress, marriage, divorce, and grief.
Your advisor doesn’t need to become your closest confidant, though that would help; you do need to be able to have enough trust in them to let you be completely honest and transparent, so that they can do the best job for you.
Hiding important details from your advisor will hamstring them and affect the effectiveness of their plan and advice in helping you achieve your goals.
In addition, you need to make sure that they provide the support you need. An advisor who keeps focusing on market performance alone isn’t right for you if you need help with your full financial picture, including retirement planning, tax strategy, insurance needs, estate planning, and cash flow.
On the other hand, if you’re early in your career and just need one-time guidance on a particular topic, an ongoing full-service relationship is likely more than you need, and certainly more than you want to pay for.
You shouldn’t look for the advisor who offers the longest laundry list of services. You want to find one whose experience, process, compensation, and client focus align with your specific needs at this time.
As Simerly says:
Job title and website services listed don’t matter. Sound frustrating? I couldn’t agree more.
Job titles have become interchangeable in advisor and insurance marketing. Seemingly, every advisor website now uses fancy job titles and lists every possible service. But the only standard in listing services is whether they could theoretically be offered, not whether the advisor actually provides them to clients regularly.
So, ask your potential advisors, ‘What did you do this week?’ ‘How do you normally spend your time with clients?’ ‘What percentage of time do you spend on investments?’ ‘How many clients do you serve, or how many do you serve per advisor?’ You’re looking for someone honest about the fact that investments are just one piece of the puzzle. You’re looking for someone who spends most of their time on financial planning and meeting with existing clients, instead of selling to new ones.
Questions like what Simerly suggests can reveal if a specific advisor does daily what you need them to do for you. If you want comprehensive planning, you need someone who regularly helps existing clients with financial planning questions and doesn’t just manage portfolios or sell products.
Table 4 provides a quick due diligence checklist for how to hire an advisor.
The Bottom Line: You’re Hiring Better Decisions, Not Just Portfolio Management
As many people believe, a financial advisor will usually help manage your investments.
But as most advisors noted, that isn’t the full picture and isn’t where they see their greatest value for clients.
They identified their broader value as helping people make better financial decisions before, during, and after major life transitions and avoiding expensive mistakes.
This can include:
- Building a retirement income plan.
- Evaluating a job offer.
- Navigating an inheritance.
- Coordinating tax strategy and decisions.
- Reviewing insurance coverage and needs.
As Simerly puts it:
The scope of work for a comprehensive financial advisor continues to grow. More and more professionals are realizing the benefit of having a true financial planner in the picture, whether it’s for tax returns, legal matters, or a home sale. The catch is that it means we need to charge more to cover more areas. If you want real advice, be ready to pay more than what an advisor who only handles investments will charge. The real question is this: Are you hiring an advisor for the money you have now, or for the wealth they will help you build over the next 2-8 decades? If it’s the latter, hire someone as serious about what they do as you are about building that wealth.
Clearly, not every person needs the same sort of advisor, or even any advisor in many cases.
The best way to assess if you should look for an advisor, and especially a full-service one, is to consider whether you’re at a point in your life and career, with consequential, complex, and/or emotionally charged decisions that need to be made, where experienced guidance could help you make better decisions, avoid costly mistakes, and reduce your emotional stress around those decisions.
Because people think they’re hiring someone to manage investments, when in reality, they’re more often hiring someone to help them make better financial decisions, and the value of having an advisor, if you need one, is about more than just money.
If your finances are simple, your goals clear, and you’re comfortable DIYing, you probably don’t need an advisor, at least for now.
Once you figure this out, the decision as to wanting professional advice will become clearer, as will the kind of advisor who would be a good fit for your needs.
Frequently Asked Questions
What does a financial advisor actually do?
Many advisors manage investments, but comprehensive advisors also help with retirement planning, tax strategy, insurance, estate planning, cash flow, education funding, charitable giving and compensation and benefits. The advisors interviewed said their greatest value is helping clients make better money decisions and coordinating how choices in one area affect the others.
When is it worth hiring a financial advisor?
Advice tends to pay off most when a decision is hard to reverse, the stakes are high, the right answer isn’t obvious or emotions make clear thinking difficult. Common triggers include a complex job offer, an inheritance, approaching retirement, the death of a spouse, selling a business and major healthcare, tax or housing decisions.
Do I need a financial advisor if my finances are simple?
Probably not, at least for now. If you are early in your career with simple finances, manageable debt, steady saving and no major decisions ahead, you can likely do it yourself. One advisor interviewed said an honest advisor should tell such prospects so in the first meeting, while another argued everyone benefits from advice, just at different frequencies.
Do you need to be wealthy to work with a financial advisor?
No. One advisor interviewed noted that you don’t need millions in invested assets, and that there are advisors who work with people at all income and asset levels. What matters more is being open to guidance, transparent about your situation and ready to act on advice.
What is the difference between fee-only, fee-based and commission-based financial advisors?
Fee-only advisors are paid directly by clients (flat, hourly or asset-based fees) and accept no commissions. Fee-based advisors charge fees but may also earn commissions on products they sell, and may not always act as fiduciaries. Commission-based advisors earn commissions on products and accounts they sell, which can create an incentive for more transactions.
Find financial advisors who specialize in helping people like you
Search Wealthtender by specialty, location and fee type, compare advisors’ approaches, and read what their clients say before you reach out.
Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the author
Contributing Writer, Wealthtender
My career has taken some unexpected turns, from earning a PhD in experimental high-energy physics, to conducting cosmic-ray research in Antarctica, to supporting NASA projects and programs, to running my own consulting business. I also run several other small businesses and help my wife run her Marriage and Family Therapy practice.
Those experiences taught me to question assumptions, think critically, and recognize that real-world decisions of any significance rarely have simple answers that apply to everyone. Today, I bring that perspective to writing about personal finance. Drawing on my analytical background, business experience, and research, I explore financial decisions, challenge conventional wisdom, and help readers understand the tradeoffs that can affect their financial well-being. To complement my own research and experience, I also weave insights from financial professionals into my articles, drawing on their expertise and real-world experience helping clients navigate financial decisions and challenges.
At medium.com/@opher-ganel, you can read more of my articles and subscribe to receive email notifications when new ones come out.