Center for Personal Financial Management

Why would I need a financial advisor?

By CPFM | April 18, 2024

Have you ever received a large sum of money and wondered what you should spend it on?  Maybe a particularly nice tax return, relief check, or inheritance?

If this happened to you, did you take a moment to consider investing it for the future? I think most of us would have, even if just for a moment. 

Perhaps, when you thought about investing, you didn’t know where to start- where to invest, how to invest, what places won’t cheat you out of your money, etc.  We all know finances can be overwhelming, and, as college students, it can be downright impenetrable.

Answers to these questions can be found by using something that most of us probably don’t think about- a financial advisor.  You may have heard about financial gurus on Wall Street or the super-wealthy hedge fund owners in the Caymans, but you probably don’t consider them as relevant to you.

Well, they are! They are super relevant, and here’s when and why you should get one!

When to Get a Financial Advisor:

1. When you receive a large sum of money.

2. When you want to start investing large amounts regularly

3. When you get a job that gives you regular, set incomes.

4. When money freaks you out and you need help.

Why to Get a Financial Advisor:

1. They are experts on money.  They know what to get and what to avoid, and many will have a vested financial interest in your success.

2. They know the law.  There are a lot of laws involved with finance, and financial advisors know how to stay on the right side of them.

3. They know and watch investments.  You have a busy life, and you can’t be expected to watch the stock market and make a profit when it matters most.  Financial advisors do, though, and they know when to invest and how to do so.

4. They provide accountability.  If you are the only person who worries about your money, you have no accountability for its use.  You may reduce your savings or tithing allocations to make some small purchase if you don’t have someone helping and allocating your accounts.

Why should I trust someone with my hard-earned money?

Of course, not everyone is trustworthy, and giving your money to someone to invest is a scary idea.  Most people that you deal with in the financial industry will be honest, but there are always a few bad apples.  Fortunately, the system is built to help ensure that you are taken care of.

How do advisors make their money?

There are tons of different payment methods for financial advisors, but most are paid in some combination of up-front fees and percentages of asset holdings.  That means you may need to pay a little bit upfront, but most of their pay comes from the funds that you give them to invest.  Many only take a portion of the profit (money gained on top of the money that you put in), so you don’t pay a whole lot off the top.  Regardless of the pay structure, most financial advisors benefit when you benefit, so they have a vested interest in making sure that you make money.

There are a lot of different payment scales, so make sure you know what you’ll be paying before you work with an advisor!

Who can I trust?

Trusting someone enough to give them your retirement funds is a big deal. You may be lucky enough to find a fiduciary, someone who is legally obligated to work in your best interest as the owner of your funds. You may also find a financial advisor or investment counselor who only takes their fee from your gains, which only benefits them if they are good at their job.  Someone who has been professionally trained will have ‘CFP’ by their name, indicating that they are a Certified Financial Planner and at least know a little bit of what they are doing. Regardless, make sure you read the fine print and have an exit plan!

If you want a financial counselor with a Christian background who has been trained to keep clients’ best interests at heart, go with a Certified Kingdom Advisor (CKA). These are CFPs who have gone through additional training that ensures that they know and practice sound Biblical financial advising.  I’ve met quite a few of them, and I have to say, I’ve been quite impressed!  Check out this link to find one in our area and access their knowledge!

This is way too much to think about.

Worried about all this? Well, if you are a college student, we are here to help! If you are at this blog, you probably have some idea of what the Center for Personal Financial Management is and have some interest in us.  If you just want to get your feet wet with a financial advisor, try us out!! We aren’t professionals, but we can help you experience what you’ll get if you go to an advisor, and we can help you build a foundation that will help you with all future financial questions.

If you want to meet with us to talk about any of this, or maybe to find and meet with a CFP and/or CKA, please fill out this form and we’ll meet with you soon!

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