Like a lot of financial advice, the answer depends on your personal circumstances; it’s less about your age and more about the complexity of your finances. Financial advisors can provide valuable guidance as your income, investments, and responsibilities grow. But they also come with costs—either directly or through commissions.
Here’s how to tell when you probably don’t need a financial advisor, and when hiring one may make sense.
When you probably don’t need an advisor
Before we dive into the situations when you might want an advisor, let’s look at when an advisor is unlikely to add much value:
Your finances are fairly simple. You have a steady income, no dependents, and a straightforward tax situation. Your investing is already handled through ETFs or a robo-advisor, and you’re not looking for help picking individual stocks or building a complex strategy. All you need to do is stay consistent.
Your investment timeline is long. You’re still in the accumulation phase with decades to go before you need to think about investment withdrawal planning. With fewer moving parts, your accounts are probably manageable on your own.
You’re confident in sticking to your plan. You don’t second-guess your decisions during market volatility, and you’re not constantly adjusting your portfolio based on headlines or social media trends. You’ve got a strategy that you stick to, even when things feel a little uncomfortable.
Of course, simplicity doesn’t last forever. As your financial situation becomes more complex, your needs begin to change.
Related reading: Having a financial plan more than doubles your retirement confidence
When an advisor starts to make sense
Rather than tying your need for a financial advisor to a specific age, it’s more useful to look at your overall financial situation. In most cases, the point at which an advisor becomes valuable has more to do with increasing complexity than with getting older.
An advisor may make sense if you’re going through any of the following:
Major life transitions: Receiving an inheritance, getting divorced, changing careers, or suddenly managing stock options or multiple investments
Rapid income growth: Working in a field like medicine, tech, or business where income rises quickly or comes in the form of bonuses
Increasing tax complexity: Higher income, multiple income sources, capital gains, business income, or workplace pensions that need coordination
Ultimately, you’re the best judge of when you need a financial advisor. If you’re second-guessing investment decisions you’re making or you’re repeatedly making inconsistent money moves, it’s probably time for an experienced set of eyes to offer some guidance.
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Your middle-ground options
Maybe you find yourself somewhere in between these scenarios—you don’t feel fully confident managing your investments alone, but you’re also not in a position to pay for ongoing financial advice.
The good news is that there are flexible options between doing everything yourself and hiring a full-service financial advisor.
One-time financial plan: You pay a flat fee for an advisor to help you build a plan to implement on your own. This is a great option if you want an investment strategy without ongoing portfolio management.
Hourly advice: Some financial advisors offer advice-only service paid by the hour. This can be useful if you have specific questions about your portfolio or taxes but don’t want to commit to a long-term relationship.
Free educational resources: Many online brokers and financial professionals offer educational posts, videos, and tools that can help you grow your knowledge for free.
Employer programs: Some companies offer financial education workshops or retirement planning resources that can help you get started early on in your journey.
Investing isn’t one-size-fits-all, so it’s perfectly fine if your financial advisor strategy is a little creative and evolves over time. For many people, the value of working with a financial advisor is about more than performance; advisors can offer peace of mind, and it’s hard to put a price tag on that.
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How your needs evolve by life stage
As you move through different stages of your life, your investment priorities evolve. When you’re younger, you have time, so you can afford to take on a little more risk. As you near retirement, you’ll become more conservative and shift your focus to preservation rather than growth.
Remember, these are broad investment goals that assume you’ll retire in your mid-60s. If your retirement timeline is different, your investment strategy and goals may vary.
What really matters when you hire a financial advisor
So, you’ve decided that you’d benefit from the help of a financial advisor—how should you start narrowing down your options? Here are some important considerations:
How the advisor is paid: Some advisors receive commissions or product-based fees, which can lead them to steer you towards those products. Fee-only or advice-only advisors are obligated to act in your best interest and may charge an hourly rate, flat fee, or asset under management fee. Understanding how an advisor is paid can help you identify potential conflicts of interest and set expectations.
What decisions they’ll help you make: Do you want help creating a personalized financial roadmap, or do you need investment recommendations to meet goals you’ve already set? Recognizing what you want an advisor to accomplish can help you choose one with the right expertise.
How much support you want: Some people benefit from a one-time plan that they can implement on their own, while others need ongoing support with regular portfolio reviews and adjustments. How involved your advisor is will shape how much you pay.
With all those big-picture decisions on your mind, don’t overlook important details like verifying credentials. Check the FP Canada directory to tell if a potential advisor is qualified and in good standing. Once you’ve confirmed their credentials, read reviews or reach out and meet the advisor to get an idea of whether or not they’re a good fit.
The bottom line
All of these decisions can feel like a lot, but it’s worth remembering that your investment portfolio is yours to control. If a financial advisor isn’t the right fit or your needs change over time, you can always reassess and look for different support.
