Little-Known Advantages of Hiring a Financial Adviser

A financial professional can help prevent investment errors.


With the financial industry having such a bad reputation, it's easy to shrug off advice from financial advisers and assume that they are trying to lure your money into their own pockets. However, millions of people rely on these professionals to help them achieve financial freedom. And while there are many examples of people whose portfolios were damaged by untrustworthy investment advisers, many of us would actually benefit from having the help of a financial expert. Here are a few of the not so obvious advantages of getting sound advice from someone who charges you a fee.

[See The 10 Most Difficult Retirement Decisions.]

It keeps you in the market. Part of the motivation of a financial adviser convincing you to stay in the market can be selfish. But it’s also an advantage to you if someone can help you keep your cool and not panic and sell your investments when times seem dire. Market timing can be extremely costly.

You will be more critical of the investments you own. With all the conflicts of interest within the financial industry, you are naturally going to be wary of any investments that a financial adviser recommends. However, this could also motivate you to learn more about investing so that you will make smarter financial decisions.

Offers exposure to different types of investments. There are many complex financial products, and chances are good that your financial adviser will suggest one or two that you've never heard of. Whether you decide to allocate money to these investments is up to you. But you will learn more about how best to diversify as you try to figure out what the investments really are.

[See 10 Places to Buy a Retirement Home for Under $100,000.]

Act as a second opinion. Part of the reason investing is so difficult is because most investors make decisions on their own with no training or education. With a financial adviser, you immediately get a second opinion on your investment choices.

Helps keep you on track. It is amazing how easy it is to slack off if no one is watching. A financial adviser can sometimes help you stay disciplined just because you know there’s someone monitoring your plans and goals. If you tell no one, it’s easy to skip a deposit into your savings or investment account every once in a while. But if you know someone is watching, you just may be able to keep yourself on track more often.

[See 5 Ways You Could Be Sabotaging Your Retirement.]

Can offer good examples of success stories. One of the best ways to encourage investing and saving discipline is by learning from successful people who have done it. A good source for these stories is a financial professional because of the sheer number of people he or she has worked with through the years. Whenever you need some motivation to save month after month, just ask your adviser to share some stories of real people who happen to have a similar background. The imagery will help keep you focused on your goal.

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.