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Thread: People are talking about financial advisors...

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    #1

    People are talking about financial advisors...

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    Who needs one? When is the best time to get one? Are they a lot of money?

    I always feel 12 when it comes to finances...
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    #2
    Everyone needs one at some point.
    All a financial advisor does is inform you of the financial realities of the world. It can be a website, a friend, a tax advisor, etc.
    Puts your life into perspective and explains methods of getting there.
    It can be as simple as you asking how to best pay off your debts, to figuring out a long term financial and retirement plan.

    There is no one right answer for everyone, and every advisor is going to give you different answers and different plans.

    Also, one can not help you unless you know what questions you want to ask, or what answers you are looking for.
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    To me, it is key that you find one who is paid for his time. There are plenty of "free" advisors out there who take no money from you, and who instead make a living from commissions from investment and life insurance companies. What that means is that they want you to buy as much as possible, so they are always going to be biased.

    A fee-based advisor will make you pay him for his time, but in return, you will get more grounded advice. He can tell you that right now, you don't need any additional life insurance, for example, because he doesn't need to sell you a policy in order to pay his bills. It makes no difference to him whether you invest a zillion dollars of put it all in a mattress, so his advice will be more unbiased.

    There are different fee structures. Some fee-based advisors will charge you a % of your assets. Typically, this is for higher net-worthcustomers. If you are just looking for basic advice, you probably want someone who charges by the hour. It's going to vary a lot, but $100-$250 an hour is probably a decent estimate. You can call ahead and explain what you want, and then ask for an estimate of how many hours they think it will take. Depending on your current situation, they'll probably want to spend some time before your appointment reviewing whatever investments and assets you have, and then you'll also pay for the appointment time and any follow up.

    What you probably need is someone to sit down and explain the basics of investing (so you don't feel 12), and then recommend some basic products (life insurance if you need it, and some basic starter investments).

    Another approach might be to read a couple investment books on your own. Those are cheap or free from the library, and will give you a ton of information. If you still feel like you need an advisor, you can then pursue that, but the books may be all you need. And if they aren't then at least you get some basics out of the way before your start paying someone to explain those things.

    As for who needs an advisor, I'd say that anyone who is prevented from proper investing and planning because of discomfort or lack of knowledge would benefit. Again, you can try to get that info on your own for free. But if you aren't going to do that, then an advisor is a decent alternative. If that's what it takes you to get investing, then it's worth it. If you are willing and able to find other ways to get the info, then that is going to be the cheaper way to go.
    Science always wins over bullshit. ~Dick Rutkowski
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    #4
    Wow I really appreciate the advice that both of you gave me. I feel as though there are some areas in life that getting away as a novice is ok, but I don't want this to be one of them. I wish I had learned more just growing up, but that's alright-I need to learn now too so that my kids WILL learn growing up. Thank you both again!
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    #5
    Wow, I think these are both great answers! As a financial planner, I've worked with folks with little experience to those with a lot who are just looking for a sounding board/second opinion relative to what they are doing. I do think working with a Certified Financial Planner is a good idea. Here's an article from the CFP board on choosing a financial planner.

    I love villanelle's idea of reading about personal finance (yes, investing, but also insurance, taxes, etc.). The USAA Educational Foundation is a good source for non-sales information on everything from investing to preparing for parenthood. There's also a ton of good material on usaa.com. Good luck!
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.
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