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When Should You Get a Financial Advisor? A Question We’re Asking Ourselves…

when should you get a financial advisorJust a few decades ago, investing really wasn’t that easy. If you wanted to invest in stocks, you needed to buy whole shares (mutual funds weren’t mainstream yet), you really didn’t know how well they were doing unless you checked the newspaper every day (and even then, news was typically limited to the rise and fall of the ticker symbol…that’s it), and you almost certainly needed to invest through a broker. The big question wasn’t, “When should you get a financial advisor?” It was, “Am I rich enough to start using one?”

Thankfully, times have changed dramatically.

Today, things are so much different. Information is at all of our fingertips, we have the option to invest in thousands of different mutual funds and index funds, we can typically buy them in an instant, and trades are basically free online.

So is a broker still needed?

And if they are, when should you get a financial advisor?

When Should You Get a Financial Advisor? A Truly Valid Question These Days…

If you’ve been reading this blog for a while, chances are that you’re (at minimum)…

  • living below your means,
  • you’ve set up a mini-emergency fund, and
  • you’re starting to get yourself out of consumer debt

So…at what point should you start thinking about investing?

You definitely don’t want to start too late – you know deep down that it’s something you should start early so you can capitalize on compound interest…but when are you really ready? And when is a financial advisor really needed?

All great questions. Let’s get them answered!

1) It Depends on Your Financial State

As many of you know, I love the Dave Ramsey baby steps:

  1. Save up a mini-emergency fund of $1,000
  2. Get out of consumer debt
  3. Build up a 3-6 months emergency fund
  4. Invest 15% of your household income into retirement
  5. Save for your children’s college fund
  6. Pay off your home early
  7. Build wealth and give!

We’re all at a different place in our financial journey, and for different reasons too! Wherever you are in the baby steps, just keep kicking butt and continue working toward the ultimate goal, step #7!

But, for what I’m about to say next, it does depend on where you are in the baby steps.

If You’re on Steps 1, 2, or 3

Whether you’re…

  • just jumping in and setting up a mini-emergency fund,
  • digging your way out of consumer debt (which is pretty much everything except the house), or
  • building up your bigger emergency fund (since you just killed your debt! Nice job!!)…

…you aren’t yet ready to invest. 

You’re simply not up to that step in the plan (baby step #4)! 

If You’re on Steps 4, 5, and 6

You’re beyond step 3, which means you’re simultaneously working on steps #4, 5, and 6. 


  • Saving 15% into your retirement accounts,
  • Saving up for your kids’ college, and
  • Putting the remainder of your money toward the home mortgage!

It’s a pretty sweet time. No debt, you’re building up all your investments, and life is fairly stress-free!

At this point, you’re probably investing…

  • in your 401(k) through work, 
  • within an IRA online (perhaps through Vanguard or Wealthsimple (My affiliate link – invest $100, get $50 free), or
  • you’re considering taking your money to a financial advisor.

No option is a terrible one. The point is though, that during these steps (and or course during baby step #7 as well) you can certainly invest and have the option to invest with a financial advisor.

Some advisors have minimums to get started, which honestly isn’t the end of the world. And really, if it were me, I’d probably save up $5,000 before heading over to a brokerage firm. It shows that you’re a serious investor and that you’re ready to take action on your future retirement goals.

start investing with little money2) It Depends on Your Investment Preferences

Where are you comfortable putting your money? Or, maybe better said, what investment option are you most passionate about?

  • individual stocks?
  • mutual funds?
  • index funds?
  • real estate?
  • businesses?

Or perhaps you’re into the more obscure…

  • classic cars
  • wine collecting
  • peer to peer lending
  • angel investing (think Shark Tank)
  • art collecting

If you think you’re more suited to collect wine and invest in rental properties, then your answer to the question, “Should you get a financial advisor?” should be pretty simple… 

Of course you shouldn’t!

Your investment in the stock market will likely be pretty minimal and via the most simple approach possible. And that’s fine! You’re investing your money elsewhere, into something a little unconventional…but it’s something you know, which makes it right for you.

If, however, you really don’t have any other investment vehicle that you’re passionate about, then you might just need to enter the stock market for a chance at future returns. Because after all, if you’re not investing, then you’re automatically losing money to inflation.

Don’t believe me?

Sidebar to prove a point here…

Everything pretty much doubles in price every 20 years. If you have $100,000 today, in 40 years it will be like having only $25,000. Where you could have nearly bought a house for your money today, in 40 years, you wouldn’t even be able to buy a new car!

Even if you’re not a savvy investor, making an effort to invest simply is often a better idea than doing nothing. So, a financial advisor might be a reasonable option for you.

3) It Depends on Your Market Beliefs

I’ve met many financial advisors that talk to me about single stocks that yield great returns and dividends. I’ve also read about many mutual fund managers that fully believe they can beat the overall market with their superior intellect and trusty analysts that work around the clock in their certain sector of expertise.

It all sounds great… And you know what? Sometimes it even looks good on paper. But I’ve been in the business of researching this stuff for quite a while now.

I’ve done the case studies and here’s what I’ve found:

  • Individual stocks get too pricey with all the transaction fees.
  • Also, with individual stocks, you tend to move your money around too often and jump around from stock to stock…often missing out on growth
  • Mutual funds are good, and they can beat the market, but once you pay all the management fees (and hidden fees), they too often yield less than the overall stock market

After 10+ years of constant self-education in the personal finance arena, I’ve deduced that index fund trading is the way to go. I’ve decided that it’s too difficult to beat the market, so I may as well just diversify within the market.

If this resonates with you, then your question probably is no longer, “When should you get a financial advisor?” … It has now become, “Do I ever even need a financial advisor?”

Related: Can Your Mutual Funds Beat the Stock Market?

This is the situation that Liz and I are in. We’ve got money in my 401(k) at work and we’re stacking up quite a few dollars in our checking account. It’s getting to the point where we’re wondering, “Should we maybe talk to an expert?…Just to be safe?” 

But I already know what they’re going to tell me:

  • “Put 80% of your money in the stock market – likely mutual funds…here’s the ones we recommend (no doubt the ones that pay for their recommendation)…”
  • “Put the remaining amount in bonds and stable funds…and maybe a little bit into currencies or a hedge fund…”

I’ll disagree with their plan and ask to be put into a simple S&P 500 Index Fund. Annnnnd….what am I paying them for at that point?

The whole process is pointless for us since we don’t believe in the traditional financial advisor recommendations…and therefore won’t do what they say.

4) It Depends on Your Wealth

If your net worth is under 2 million bucks and you feel like you’re perfectly capable of investing on your own, then you may just want to fly solo for a while (That’s our plan right now). 

But what if you’re worth more than $2 million? At that point, it might be worth it to employ someone to bounce ideas off of – someone that might also understand (or have connections for):

  • Taxes
  • Estate planning
  • Real estate investments (and their benefit)
  • Angel investing
  • Insurance
  • Etc. etc. etc….

The point is, as you grow your wealth, it won’t just be about earning 8%+ on your money anymore (or whatever your target number is). It’s about retaining your money, not losing it all in a lawsuit, earning passive income, setting up your estate for your heirs, and having fun with the life you’ve got left!

When Should You Get a Financial Advisor? In Summary…

So what about you? When should you get a financial advisor? 

You may want to look into hiring a financial advisor if…

  1. You’ve saved up a 3-6 month emergency fund and paid off all consumer debt
  2. Of all your investment choices, you’re interested in investing in the market
  3. You believe your advisor can earn you higher returns, even after fees
  4. And, the trump card…If you’re worth more than $2 million – your whole investment plan might be worth running by a professional. See what they think.

Liz and I…we’ll wait a few more years before we consider it again. 

What about you? Are you in the market for a financial advisor? Why or why not??

Grow Rich Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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