Hiring a financial advisor to help manage, invest or make decisions about your money sounds impossibly expensive when you’re just starting out or have few assets. But experts stress that there is no universal asset or income threshold clients must meet when it comes to seeking the help of a financial professional.
“Anyone who has questions or concerns about their personal finances probably has enough money to get them answered, or to get some direction or advice,” says Sheryl Garrett, president and founder of the Garrett Planning Network, a national network of fee-only financial advisors.
Yes, low-income and low-net-worth clients may have extra challenges when it comes to finding professional help, but they can clear those hurdles if they find an advisor and fee structure that works best for their budgets.
Still worried that you don’t make enough to enlist the services of a financial professional? Consider these strategies to find the right financial advisor for your budget.
[See: 8 Times to Talk to a Financial Advisor.]
Consider the cost. The cold, hard fact is this: It’s not going to be dirt-cheap to hire a competent financial advisor. So ask yourself whether you truly have room in your budget to pay for those advising services, which may cost a few hundred bucks per hour or a few thousand dollars for a complete financial plan.
If you don’t have the cash on hand, consider doing some basic personal finance work on your own — say, by reading the U.S. News My Money blog or buying a personal finance book — to budget for that anticipated expense. “You don’t want to be spending your budget too much on a financial planner if you’re not saving for retirement or paying off debt,” says Shannon Pike, national president of the Financial Planning Association.
You may be surprised to find that you can accomplish some of the basics of financial planning on your own before needing to turn to a professional.
[See: Decode These 10 Vexing Financial Terms.]
Think about the fee structure. When consumers think they don’t make enough to hire a money professional, experts say, they’re often envisioning a payment structure in which the financial professional takes a percentage — often 1 to 2 percent — of their account value.
They worry that because they have few assets, no advisor will want to take them on as a client. Don’t be discouraged, experts say, there are other types of financial advisor fee structures out there that don’t require six figures in an investment account. Clients with smaller asset amounts may want to look to financial advisors who charge an hourly rate, a monthly retainer, a flat fee to complete a specific project or some kind of combination of those fee structures.
Understanding the type and amount of a potential financial advisor’s fee should be part of your search, experts say. As you call potential advisors, “always ask for an estimate or firm quote upfront [and] in writing,” Garrett says.
Consider, too, what kinds of services you need. Are you just looking for an annual checkup or are you hoping to regularly meet with someone to make complex investing decisions? “Sometimes, depending on where you are at the stage in your life, you might just need a consultation,” Pike says. “You don’t have to think you have to get into a monthly or quarterly relationship.” Those needs will impact the kind of professional you work with and the fee structure you’ll use.
Don’t forget to hire a professional who acts as a fiduciary, experts say. Fiduciaries are advisors who formally commit to representing your best interests. They won’t sell you products that you don’t need in order to score a commission or a percentage of the sale.
[See: 14 Important Personal Finance Dates to Mark on Your Calendar.]
Do your research. Consumers who don’t have lots of assets may feel like it’s harder to find a financial advisor who is willing to work with them. But take heart, experts say. “It might be harder to go find them, but they’re out there,” Pike says.
One way to narrow the search is to look up networks of fee-only financial advisors. Consider the Garrett Planning Network, a national group of hourly based, fee-only financial advisors. The National Association of Personal Financial Advisors, also called NAPFA, is another professional association of fee-only financial advisors, who sign a fiduciary oath. The XY Planning Network is a group of fee-only financial advisors who specialize in working with Generation X and Generation Y clients and do not require asset minimums.
Clients who don’t live in a major city may find that locating a nearby fee-only financial advisor is challenging. If that’s your situation, consider looking for financial professionals who are willing to work with you remotely, says Warren McIntyre, owner of VisionQuest Financial Planning in Troy, Michigan.
LearnVest, for example, is a remote financial planning firm that charges a one-time setup fee of $299 and $19 per month for clients who work with its financial team. Other independent firms may be willing to communicate with you via phone and email instead of scheduling regular in-person meetings, McIntyre says.
Bottom line: Professional financial advice is achievable for people from all financial backgrounds, as long as they ask smart questions and understand the costs of hiring the right money pro.
More from U.S. News
10 Questions to Ask Before You Hire a Financial Advisor
11 Money Moves to Make Before You Turn 40
8 Financial Steps to Take After Paying Off a Debt
Do I Make Enough Money to Hire a Financial Advisor? originally appeared on usnews.com
