When Do I Need a Financial Advisor? 5 Times to Move Beyond DIY

young couple meeting with advisor

Early in your career when your finances are simple, you likely can manage them on your own. Free online tools help make budgeting a breeze. And automated solutions can help make retirement saving easy.

But life and finances become more complicated over time. As your income rises, you might want to invest beyond your 401(k) plan. Goals and responsibilities may expand, such as upgrading to a larger home, financing college for the kids, or caring for children and parents at the same time.

So, even if you’re committed to DIY your financial life in the early stages, at some point it may be helpful to have it DFY (Done-For-You) by a financial professional.

Read Transcript

Here are five situations when turning to a trusted advisor can be indispensable:

Keeping Calm During a Downturn

When stocks plunge, panic soars. That can cause investors to try to stem their losses by selling their shares before they fall further. In fact, after the 2007–2009 bear market it took many investors years to feel comfortable investing in stocks again. And by hesitating, they missed out on the beginnings of the next bull market.

Financial advisors are invaluable in this situation because they can help you avoid panic selling. Typically, advisors prepare their clients for potential portfolio shocks, such as the inevitable bear market, so they don’t overreact when it happens. What’s more, an advisor can also help you develop and maintain the appropriate asset allocation* – your optimal mix of stocks, bonds, and cash – based on your investment risk tolerance, to help you sleep at night.

Determining Life Insurance Needs

If anyone is dependent on your income, then you may need life insurance. But how much is enough? Guidelines suggest anywhere from five times your annual income to as much as 20 times.1 With such a wide range, you could end up buying more insurance than necessary. Or worse, too little.

An advisor can help determine the right amount of coverage based on your situation. For instance, you may want enough coverage to pay off the mortgage and other debt or to make sure college is funded for each child. For some, coverage could enable a surviving spouse to remain a stay-at-home parent.

Even if your children are financially independent and you’re nearing retirement, you may still need life insurance. A primary reason is to supplement your spouse’s retirement income as needed.

An advisor can also help you choose between term insurance that covers you for a certain period or permanent insurance that may have an investment component.

Preparing an Estate Plan

Your advisor can recommend an estate planning lawyer who can draw up your will, powers of attorney and other documents you may need. An advisor can also help you gather all the necessary paperwork you’ll need when meeting with that professional and help ensure you don’t overlook an important account or estate asset. And once you have the necessary estate documents in place, your advisor can remind you to update beneficiaries as needed.

Assessing Progress Toward Retirement

Effective retirement planning is a fluid process that requires regular monitoring and adjustment. A financial advisor can help by reviewing your investments and savings rate to help make sure you’re on track. Even do-it-yourselfers can benefit from a periodic checkup with a professional while they still have time to correct course.

Planning Retirement Withdrawals

Years of accumulating money for retirement is just part of preparing for your next act. The other – and maybe more challenging part – is making sure your nest egg will last 20, 30 or more years in retirement. And if you’re married, those funds need to sustain two retirements.

An advisor can help you customize your withdrawal rate, in an effort to avoid pulling out so much that you run out of money or taking so little that you scrimp unnecessarily in retirement. For example, you might want to withdraw less if you have a healthy pension or if you want to leave money to heirs. Alternatively, if you intend to work longer, you might be able to withdraw more. An advisor can also periodically revisit your calculations and recalibrate if necessary.

In addition, an advisor can help you decide about whether it makes sense to purchase an annuity to help ensure you don’t outlast your money.

Finding an Advisor You Trust

How can you find the right advisor for you? First, assess the type of advice you need. While advisors can help manage your money, they also have different areas of expertise and focus. For example, some specialize in portfolio management, while others focus on insurance or tax preparation. Learn more about different kinds of advisors and specialties.

Next, look for a fiduciary. A fiduciary is someone who must legally put your interests above his or her own. It’s also a good idea to interview more than one advisor. Ask your top candidates about their qualifications, how they are compensated, and how often you’ll communicate with each other.

Lastly, always review the disciplinary records for financial advisors at adviserinfo.sec.gov and for brokers at brokercheck.finra.org.

1 How Much Life Insurance Do You Really Need?” Forbes, Jan. 13, 2020.

Registered representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Not all Mutual of Omaha Advisors representatives are financial advisors. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

Mutual of Omaha and its representatives do not provide tax and legal advice, and the information provided herein is general in nature and should not be considered tax and legal advice. Consult a qualified professional regarding your specific situation.

*Asset Allocation seeks to maximize the performance of your investment portfolio using diversification and disciplined investing. Diversification can be thought of as spreading your investment dollars into various asset classes to add balance to your portfolio. Although using an asset allocation methodology does not guarantee greater returns or against the risk of loss in a declining market, it may be able to reduce the volatility of your portfolio.

item# 466022