Do You Need a Financial Advisor?

On 08/01/2012, in Financial Advisors, by Jordan Wilson

Does anyone really need a financial advisor?

Short answer, no.

Longer answer, a financial advisor may be well worth considering.

Here is why. 

Not Quite Rocket Science

As I wrote above, the short answer is no. No one needs a financial advisor.

Financial advisory skills require technical training and experience, but it is not quite the same as surgery.

If you require a colonoscopy, I doubt many non-doctors can read up on the procedure, easily acquire the technological tools, perform the procedure on themselves or family, and then competently analyze the results. The same holds true for a root canal. The barriers to conducting these types of operations yourself are extremely steep. That said, I do encourage my nephew to give both a try as he is quite the smart young lad.

Financial planning is slightly less onerous. There are an abundance of inexpensive investing and analytical tools on the market, a myriad of low cost investment options, and many, many, books and courses offered on building wealth. The barriers to entry in this field are much less than in becoming a surgeon or astronaut. If you have adequate time to learn the ins and outs, as well as an aptitude for wealth planning, you may be able to manage your own affairs.

So I do not really think most people need to hire a financial advisor.

But do I think you would benefit from doing so? Probably.

This is Their Profession

The financial advisor you choose should be a competent financial professional. Especially in those areas where you seek the most assistance.

This is the professional’s full-time job. One in which he/she has spent many years learning. Unless you are able to devote all your time to this field, you will probably not get to the same level of expertise. Not a deal breaker, but it may be beneficial to get first rate advice and not merely based on what you can cover in your spare time.

Also, financial advice can be a multidiscipline field. Depending on your requirements, your advisor may need to understand more than simply investing. Tax, insurance, cash flow planning, income splitting, estate planning, gifting, are just a few of the other areas that usually need addressing in any planning engagement.

Comparative Advantage

One friend of mine is a lawyer. Another a mechanical engineer. And so on. All are well trained and do their jobs at a high level.

Now I could competently learn most of their jobs, assuming I wanted to go back to school. But I do not. Nor do I have the spare time to do so.

They are all intelligent enough to become financial advisors. Assuming they put in the time to learn the business. But they do not have the time. They are busy with their own careers. And any spare time that they have, they want to spend on family and leisure.

That is how the world works. We do not need restaurants, oil change shops, hair salons, landscapers, etc. But the value we get for using these services more than offsets the costs.

That is how I look at financial advisory services. The advisor has a comparative advantage in his/her field. The electrician has a comparative advantage in his/her field. By utilizing each other’s services, it is a win-win.

So Maybe Hiring a Financial Advisor is a Good Idea, But …

Working with a professional financial advisor may be beneficial for most individuals.

But how to decide on an advisor? That is potentially a difficult task.

Is the advisor highly proficient? With the expertise and experience to meet all of your requirements?

Is the advisor ethical and will act in your best interests?

Will the advisor provide strong value for the price of the service?

These same questions arise whether it be getting your car serviced, your floors retiled, or obtaining retirement planning.

So how do individuals ensure they find a strong financial advisor?

We will try to answer this next time.

2 Responses to “Do You Need a Financial Advisor?”

  1. daisy says:

    Would love to get your thoughts on our live one-on-one financial advice platform

    You can contact me at

  2. Jordan Wilson says:

    Interesting concept. Nice to be able to link a wide variety of solutions providers with potential clients. I did not see it on the site, but might be useful to have some feedback data or satisfaction rating so that potential clients can see number of satisfied clients for a specific provider. That incents providers to do a great job and helps potential customers separate the strong from the weak. For me, the major issue with this service is simply that clients often have a multitude of interlocking issues. It may not always be possible to address issues remotely and probably without a detailed understanding of the client’s overall situation.That said, it is an interesting concept and I wish you all the best with it.

© 2009-2017 Personal Wealth Management All Rights Reserved -- Copyright notice by Blog Copyright