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When Should You Hire A Financial Professional?

By Erik Folgate

You can spend a good deal of money surrounding yourself with professionals to help you do your taxes, plan an estate, buy and sell mutual funds, and buy insurance. However, I think you only need to hire a professional for certain times in certain situations. Sometimes, financial professionals get lazy with their clients, so you need to be proactive in how you manage the professionals that surround you. I’ll run down my take on when to use an estate planner, stock broker, financial advisor, and a CPA for the wealthy, the upper-middle class, and the middle class.

  • Wealthy: $150,000 and up / take home pay

  • Upper Middle Class: $75,000 – $149,000 / take home pay
  • Middle Class: $35,000 – $74,000 / take home pay

Estate Plannerrs

The wealthy and the upper-middle class with significant assets and/or minor children should definitely hire an estate attorney to draw up a will and/or a family trust. If you’ve got real estate investments and other significant assets, an estate attorney will help you set up a bullet-proof will and help protect from certain estate taxes that could drain your estate before it gets to your heirs. It wouldn’t hurt for the middle class to hire an estate attorney to draw up a will, either. Although, if you don’t have a great deal to leave your heirs, you can always buy a will at US Legal Forms and do some research on the internet to draft the will on your own. Remember to execute it properly. Follow all of the steps to make it a legitimate will

Investment Broker

An investment broker is very different from an independent financial advisor. Their expertise is the stock market, and they’ll focus on maximizing your stock investments. I think only the wealthy need to bother with paying the commissions that a personal investment broker will charge to manage their stock portfolio. With the dawn of internet trading, the upper-middle class and the middle class have the opportunity to trade stocks for very low fees. Also, if your only long-term investments are a retirement account such as a 401(k) or a Roth IRA, then usually the financial institution from which you opened the account will offer free advice for which mutual funds to select and how to devise a plan that fits your age and risk aversion.

Financial Advisor

I think that someone from any pay grade can benefit from the advice of a quality financial advisor. The key here word here is a QUALITY advisor. Make sure you do your research on finding a financial advisor that has the heart of a teacher, not someone who is only there to push a sale down your throat. A good financial advisor may charge you with a mix of hourly rates and commissions. That means, he won’t be so absorbed with making a sale if you are only there for advice rather than buying a life insurance policy or mutual fund. I would stay away from commission only financial advisors. It sounds nice, but believe me, most of them are worried about how they can turn you into a paying customer rather than giving you sound financial advice. A good financial advisor can help you maximize the returns in your retirement account and help you buy good term life insurance and long-term disability insurance. They can also help you set up college funds for your children.

Certified Public Accountant

If you want to hire a CPA to do your taxes and give you advice throughout the year, I’m not going to argue with you. But if all you have is a couple of W-2′s and qualify for a couple of credits and deductions, then don’t bother paying a professional to help you with your taxes.

However, if you are a small business owner or you are very wealthy with a tremendous amount of assets, then you should DEFINITELY seek the help of a CPA. A good CPA will save you more money than they cost you to hire. Small business owners are huge targets for audits from the IRS, so I would say that you definitely need a CPA to help you file your quarterly tax estimates and file your taxes at the end of the year. Owning your own business gets complicated when it comes to taxes, so don’t take the chance of doing it yourself. Again, if it’s only a side business, then you can probably handle it on your own. But, if it’s your primary source of income, then spend the money and seek out a quality CPA.

I am a big fan of finding financial professionals through referral. Most of the time your friends and family will shoot you straight about someone. But, watch out for those cousins of a friend, or your brother-in-law’s best friend. They may be just trying to help them out by throwing business their way without knowing how good they are as a professional. Also, check out professionals that work with the company you work for or your local church. If you surround yourself with the right people, you’ll save more money in the long-run and become a more knowledgeable consumer.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • 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…

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