When Should You Hire a Financial Professional?

These days you can hire a professional to help you do almost anything, from remodeling a home, to planning a vacation, to doing taxes, to saving for retirement. You can spend untold amounts of money surrounding yourself with people who are at the top of their field to guide you in every financial and professional move you make – but how do you determine where you need the most help, and how your money is best spent?

Your financial life is a critical part of a secure future and a stress-free present, so investing in a professional who can help you with decisions on necessities such as creating a will, planning for retirement, and purchasing insurance is essential. Certainly, you don’t need to call your financial advisor every time you make a large purchase or move a few thousand dollars to a different account – but you do need to schedule regular check-ins to make sure your financial plan is on track and seek guidance when any major life or financial change arises, such as a new baby or a divorce.

It’s also a wonderfully freeing feeling to know exactly who to call when a problem or question comes up. You may be surprised how much calmer and more confident you feel about your financial life when the name and number of a person you trust is programmed into your phone.

If you’re not sure where to start looking for a financial professional, how much one costs, which type you need, or the services provided, educate yourself and take a look at the following breakdown. You may need only one planner or attorney, or multiple advisors who specialize in different areas. It all depends on your financial situation and needs, and what you can afford. Thankfully, if you know what you’re looking for and where to look, help is only a phone call away.

Online Investment Broker

online investment broker

Before the Internet changed everything, many folks employed investment brokers to make trades on their behalf. A number high-end investors still do this, but the majority of us “99-percenters” simply use online brokers. Companies such as Fidelity, Charles Schwab, and TD Ameritrade make it easy to trade stocks, manage funds, and guide an overall portfolio. In fact, unless you only invest in your retirement account at work through the broker your employer uses, you’re likely using one of these services for your investing.

Use an online investment broker when you’re looking to do any of the following:

  • Purchase or sell stock
  • Change the stocks you own as part of your IRA or 401k
  • Move your money to either higher- or lower-risk stocks and bonds

If you have money in the markets and you don’t work in the financial industry, it may be difficult to stay abreast of market movements and keep an eye out for specific trades that should be made. In these cases you want a personal connection. Some firms, such as Charles Schwab, have storefronts and human investment brokers who can advise you on your online account. This gives a personal touch that can be very beneficial without the high expense of a traditional investment broker.

How to Find One

A simple online search should return great results. Start by investigating TD Ameritrade, OptionsHouse, Fidelity, and E*TRADE. Read online reviews, compare pricing structures, and ask within your personal network for recommendations.

Expected Cost

Online brokerage firms often charge between $5 and $10 per trade. Each offers certain bonuses and discounts, depending on when you sign-up, how much you invest, and how often you trade.

Follow-Ups Necessary

The ball is entirely in your court. Track your funds, research as much as you’re able, and keep a vigilant eye on your account. That said, never be too quick to pull the trigger on a buy or sell. It often pays to let the market run its course.

Financial Planner

financial planner meeting with married couple

Hiring a financial planner is often the first step many people take when looking ahead toward purchasing a home, growing a family, and retiring. Think of these professionals as offering strategy and guidance for every big move in life that involves assets and legal documents.

One of the main things financial planners do is offer direction on how much you should be saving and investing in order to reach your retirement goals in your desired time frame. Certainly, you can use an online retirement calculator to do a cursory search to find out how much to save, but you may need help opening a tax-advantaged retirement account or choosing appropriate investment vehicles, as well as guidance to understand their true cost and the risk assumed by investing in them.

A financial planner can also help you understand how home ownership and other real estate concerns may play into the picture, as well as assist you in determining how to budget for your children’s education. Many financial planners not only advise you in these areas but can broker investments for you and help you fulfill certain insurance needs.

Hiring a financial planner may be appropriate if you need to do any of the following:

  • Create a retirement strategy and figure out how much you need to save by a specific date in order to reach your goals for retirement savings
  • Figure out how much you can and should diversify your portfolio in order to safely and effectively reach your retirement goals
  • Receive guidance on which types of insurance (life, long-term care, disability) might be right for you
  • Set up college savings accounts for your children

Your relationship with your financial planner may span decades. Your planner may offer guidance during events that bring extreme joy – such as the birth of a child – or great sadness, like the death of a parent or a divorce. Take your initial consultation seriously, and make sure you’re working with an advisor who is truly interested in helping you learn about the financial decisions you make and how they affect your future. A good planner should be more interested in getting to know you and educating you on the moves you’re making than selling you on an investment vehicle.

How to Find One

Certified financial planners (CFPs) are what people most commonly think of when they consider hiring a financial planner, and a comprehensive list of CFPs nationwide can be found via the CFP Board of Standards. There are many other types of credentials, however, so read carefully to make certain you’re getting the expertise you want.

Expected Cost

There is a range of ways that CFPs charge for services. They can charge a commission, require a percentage of assets under management, or simply use a fee-based structure. If charging hourly, most CFPs demand $125 to $350 per hour, according to Bankrate. CFPs who bill for a percentage of assets under management usually charge between 1% and 2%, per CNNMoney.

The cost varies widely according to the services offered and the area of the country in which you live. If you have a complex financial situation with multiple properties and assets and a large family, it may cost more to develop a comprehensive financial package for your situation. Such a financial plan can cost between $2,000 and $5,000, according to Bankrate.

Follow-Ups Necessary

Just as you would follow up with your estate planner if there were a change to your personal or financial situation, you should follow up with your financial planner on a regular basis (at least once per year) and whenever adjustments are required for your retirement accounts. For example, if you were to start a new job with a higher salary, you’d need to check in with your advisor about rolling over your 401k and putting a greater percentage of your salary toward your retirement goals. Periodic check-ins are warranted every few months regardless of any changes, in order to ensure you’re on track for your anticipated retirement date.

Certified Public Accountant

meeting with a certified public accountant

If your taxes are straightforward and you just have a simple W-2 with no mortgage deductions or educational tax credits, then hiring a certified public accountant might not be necessary. You may be able to file your taxes online without any hiccups.

However, if you own a small business or have a more complex tax picture with many deductions, then enlisting the services of a CPA is a necessity to ensure that everything is done to the letter, and that you’re not missing out on tax credits or other hidden benefits. It’s often said that good CPAs can save you more money in the long run than they cost to hire.

Here’s what a CPA can help you do:

  • Determine where and how to reduce your annual tax burden
  • Find deductions (such as home office or childcare) that you might be missing out on
  • Ensure your taxes are done correctly each year
  • File for an extension on your taxes
  • Ensure that you and your spouse are filing with the appropriate withholdings

If you’re a small business owner, then you’ve probably realized that the picture gets a lot more complex with deduction concerns, quarterly taxes to be paid, and employees on payroll. It’s best not to take any chances when it comes to running afoul of the IRS, so an investment in a good CPA is essential.

Even if your tax picture is fairly straightforward, it is still perfectly reasonable to consider hiring a CPA. Many people just rest easier when they know that they have a professional on speed-dial who can help address any tax concerns before they become serious problems.

How to Find One

Chances are your financial planner or your estate planner knows a CPA they can recommend who they’ve worked with previously. You may also be able to get a good referral through a friend or colleague. You can always check out the American Institute of CPAs site to search for a CPA near you, and to verify someone’s credentials.

Expected Cost

According to the Journal of Accountancy, the average hourly rate for CPAs who own their own firms falls between $117 per hour and $319 per hour, depending on the area of the country and the size of the firm. Also according to the Journal of Accountancy, accounting salaries are expected to rise as much as 5.3% over the next year, so expect your CPA’s rates to increase accordingly.

Follow-Ups Necessary

Obviously, you and your CPA are going to connect before tax day every year, and the need may be even more frequent depending on your financial picture. For example, if you own your own business or are an independent contractor who files your taxes quarterly, you need to touch base with your CPA periodically throughout the year. You may also need to connect in the event of any questions, such as a dispute over an amount owed to the IRS or misunderstandings about what you owe on the state level.

Estate Planning Attorney

elderly couple meeting with an estate planning lawyer

Generally for people who own property and who have built up assets in brokerage and retirement accounts (via a financial planner and work), estate planning attorneys offer guidance as to which types of legal documents you may need to ensure peace of mind for you and your loved ones. Whether you want to guarantee that your children will be taken care of when you die, or you’d like to set up a trust to keep your estate out of probate or benefit a specific nonprofit, a qualified estate planning attorney can help.

Documents Prepared By an Estate Planning Attorney

Here are a few of the documents that can drafted and prepared by an estate planning attorney:

1. Wills
While you can draft a will on your own – using pen and paper or an online form – an estate planner is familiar with the legal ramifications of the document and the importance of wording your wishes appropriately to avoid undue hassles in the future. Wills are essential when it comes to ensuring that your dying wishes are carried out by your loved ones, and that your loved ones are taken care of after you’re gone. It’s never too early to think about creating a will, even if you’re young and healthy.

Individuals with young children should especially think about making a will, as specifics regarding guardianship and financial care for the child should be established to protect their well-being in the event that one parent dies – or worse, if both parents should pass. Everyone should have a will to provide clarity for family and loved ones so they don’t have to guess at, or worse, argue over your final wishes during an already difficult time.

2. Trust
Although the term “trust” may evoke thoughts of “trust fund babies” with unlimited disposable income, anyone can – and should – create a trust for asset protection. Revocable trusts (which can be changed or revoked anytime) can keep your assets out of probate after you pass while effectively transferring them to your beneficiaries. A revocable trust typically provides that property of yours – whether it’s cash, real estate, or another type of asset – is managed by someone else for your benefit.

With a trust, your assets are available upon your death for use or liquidation and needn’t be tied up in probate court. When you (the “grantor”) die, the trust acts like a will, and whatever property is named in it is distributed to your beneficiaries according to the trust agreement. A trust often includes a “pour-over will” to account for assets unnamed in the trust but left at death so that they’re split between trust beneficiaries.

3. Durable Power of Attorney
A durable power of attorney gives authority to someone to make decisions on your behalf should you become unable to do so, whether it applies to decisions regarding your own medical care or the selling or renting of property in your name. Both of these documents are essential in the event of an emergency or accident, as the last thing any of us wants is for our loved ones to get into a protracted legal battle about how to best fulfill our wishes.

In most cases, your estate planning attorney works with your financial advisor for a complete look at the planning needs of your estate. Therefore, be prepared to schedule a meeting with both professionals, or put them in touch with one another so they can work together to develop a comprehensive package.

How to Find One

It may be that a friend or family member has a great recommendation on an estate planner. For example, if your parents were happy with the professional they hired to plan their will, then reach out and see if that person can be of help to you. If word-of-mouth recommendations are few, then look for a professional near you via the National Association of Estate Planners & Councils.

Expected Cost

Most attorneys bill by the hour, so the cost for your will, trust, or power of attorney depends entirely on the amount of work involved and the hourly rate your attorney charges, which varies widely across the country. While a will may cost anywhere from $400 to $1,000, according to LegalZoom, a trust is a more involved document to craft and can cost $2,500 or more, also according to Legal Zoom.

Follow-Ups Necessary

You need to follow up with your estate planer anytime there is a significant change in your assets, or whenever you need to change your beneficiaries or powers of attorney. For example, if you had a child or inherited money or property, you’d need to call your estate planner and make an update, which would be billed at your professional’s current rate.

Of course, if nothing significant changes in your life, there’s no need to make any updates, as your signed and notarized paperwork is binding indefinitely. It’s a good idea to review your trust every few years to ensure you haven’t missed any changes or updates that need to be made.

Final Word

Managing money wisely starts with one person: you. Be sure to reduce any longstanding credit card debt you may have and vow never to take any on again, except in the most dire cases. Put a portion of your money toward an emergency fund to safeguard against unexpected events, such as a medical emergency or job loss – 6 to 12 months’ worth of living expenses is recommended. Be smart with your money and hire the right professionals to manage the wealth you’ve accumulated.

Have you ever hired a financial professional?

  • http://wohlnerfinancial.blogspot.com/ Roger Wohlner

    As a fee-only financial advisor I would suggest that this route is the way to go for most anyone who feels they need help in this area. I am a member of NAPFA the largest professional organization of fee-only financial advisors in the country. Our members offer services ranging from hourly as needed to full-blown ongoing investment and comprehensive financial advice. Additionally reaffirms their Fiduciary Oath annually upon renewal. Advice is fee-only, free from the conflicts inherent in commissioned based or fee-based advice. To find a NAPFA registered advisor in your area http://findanadvisor.napfa.org/Home.aspx.

  • Patstephens28

    Would u use a CPA to manage a secure portfolio?

  • http://www.edocr.com/doc/22035/hire-intercontinental-financial-organization-provides-efficient-expert-services-get-curren Ariel Monde

    As a Fee Only Adviser with over 30 years experience, you continue to perpetuate the misconception of Financial Planners. You make no mention of the Fee Only National Association of Personal Financial Advisers but yet you “caution” readers about advisers who charge percentage of Assets under Management as a “conflict of interest”? What about Commission Planners who receive 15% commission on the sale of annuities, and after 5 years, rollover them over again? Annuity salespeople are who you should be cautioning…