If you want to avoid outliving your money, investing can be a great way to continue to grow your nest egg as you approach — and enter — your retirement years. And while there may be many robo-advisors out there that will do the investing for you, the one-on-one, hands-on approach and personal advice and guidance you get when working with a real-life financial advisor will offer better insight and clarity into the investment process.
According to a recent survey, financial advisors have become more important over the course of the past decade.1 An increasing lifespan could be one of the many reasons people are more interested in professional help when it comes to effectively managing their money. The survey found that “consumer use of financial advisors has increased from 28 percent in 2010 to 40 percent in 2015,”1 signifying a shift in attitude toward financial professionals. And while nearly 40 percent of U.S households have a financial advisor, investors who are nearing retirement are more likely to hire one.2
From your needs and objectives to your risk tolerance and timeframe, there are a variety of factors your investment advisor will consider when designing your customized investment strategy. However, before you hire an investment advisor to help you grow your assets, it’s important to ask yourself these four key questions first.
1. How Complex Are My Finances?
While an investment advisor can be helpful in any situation, hiring one is usually more necessary when you have complex issues and questions to sort out. Things like inherited stock, investing the assets of your small business, or retirement distribution strategies require more in-depth insight. Especially if you’re about to experience a transition — such as the birth of a child, a divorce, or retirement — teaming up with an investment advisor can help guide your investments as you enter the new financial territory. Hiring an asset manager can ease the stress of investing your wealth and allow you to focus on the things you love and help you sleep well at night, knowing your investments are in the hands of professionals.
2. How Much Can I Invest?
Before deciding to engage with an investment advisor it’s important to first consider how much money you have to invest. Some financial advisory firms require you to have a minimum amount of "assets under management" (also referred to as AUM) before they will take you on as a client. However, if you find an advisor you really want to work with, it is always worth it to reach out and talk to them, for even if their firm is not a good fit for you, they can often recommend another advisor for you to work with.
3. Do I Need Additional Financial Help?
When looking for someone who can help you invest your money, you can either hire someone who purely specializes in investment management, or you can find someone who offers comprehensive financial planning services. Because comprehensive financial planning involves investing, some may argue that finding a professional who provides this comprehensive style will give you more value for your money. However, often asset managers have elaborate networks that they can connect their clients with for specialized help fitting their specific needs. When in doubt, interview a few professionals to gain a better understanding of their services.
4. What Are My Goals?
This may seem like an obvious question, but some people overlook this critical question and end up in an undesirable situation. However, if you’re certain you want to invest for the long haul, then hiring an investment advisor can give you the accountability you need to achieve your investment objectives. It's always a good idea to identify your expectations of the experience first to best understand what you need to achieve in a long-term commitment to growing your wealth.
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