When Financial Planners Are Worth the Money

Here is how to find financial advice you can afford.

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Many of us have a hard time getting over the fees that financial planners charge. Between sleazy sales tactics and the unlikely scenario of beating the market, it’s an uphill battle to convince yourself that a wealth manager justifies the cost. But sometimes financial planners are worth the money. Here are five scenarios when it may be helpful to consult a financial planning professional.

[Visit the U.S. News Retirement site for more planning ideas and advice.]

A complex financial situation. Do you own a business? Perhaps you need a more conservative portfolio than what is typically recommended for your age. Maybe you have a rather large purchase coming up, which would necessitate a change to your investment mix. Financial planning books can be a good place to start, but a financial planner can make sure your strategy will work for you.

Extra assistance. You may be able to find adequate investments yourself. But an adviser can offer additional assistance about what to buy, how to allocate your money, and how to shift those assets over time to protect your savings.

[See Sacrifices You Shouldn’t Make to Save Money.]

Access to complex investments. Advisers often have access to specialized types of investments that you may not have the time or inclination to investigate. An adviser can tell you the specifics about how to get started.

A sounding board. The next time you learn about a new investing strategy, a financial adviser can run the numbers and show you the pros and cons of that thesis. Whether it's a budget decision or a hot stock, a financial planner can offer friendly advice.

Protect your assets. There are some advisers who will recommend that you to purchase certain financial products for their own personal gain. But there are also many more advisers who will offer suggestions about how you can plan for a better future because they want to see you do well.

If you do decide that a financial planner is worth the money, there are ways to spend less than 1 percent of your assets every year on fees. Here are a few popular methods to save money when hiring a financial adviser.

[See How to Manage a 401(k) After Retirement.]

Split your assets up. Some investors have their advisers manage only a portion of their assets. This is not something I would recommend because an adviser who knows about your entire financial situation can give you much more appropriate advice than someone who can’t see the whole picture. However, this is a simple way to cut your costs when you are charged based on the size of your portfolio.

Negotiate. Most things in life are negotiable including a financial adviser’s fees or commissions. When you are interviewing potential financial advisers, see if you can get the firm to lower their fees.

Find a fee-only adviser. Fee-only financial advisers will look at your complete financial picture and offer suggestions for a fixed fee. This type of adviser can drastically cut down the fees you pay when your assets grow larger because the fees don't increase based on how much you have or what investment choices you make.

Spending money to help grow your assets is not the correct choice for everyone. But sometimes paying for financial advice can help clarify your savings and investment decisions.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.