Takeaways
- Financial advisors provide professional financial consultation to clients.
- Registered Investment Advisors (RIAs) have fiduciary standards to their clients.
- Financial advisors can assist with streamlining short and long-term goals.
- Financial advisors help with major windfalls, family planning, retirement, and more.
- Financial advisors include financial planners, tax advisors, certified public accountants, estate planners, and more.
Do you ever feel like you are overwhelmed with a financial decision? Well, you are not alone. Sometimes, major financial events virtually require a finance professional’s input to navigate because making the wrong decision could negatively affect your finances. Getting the major decisions right can set you up for a lifetime of financial success. A financial advisor can help you explore your options.
Talking to a financial advisor can be a smart money move because it provides a trusted professional to help navigate some of life’s most difficult financial decisions. Planning for financial success is one of the reasons you should talk to a financial advisor ahead of a major financial event.
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What Is a Financial Advisor?
A financial advisor is a finance professional who offers financial advice to clients. The term financial advisor is an umbrella term typically used to describe a host of different finance professionals, including financial planners, tax advisors, certified public accountants, estate planners, and investment managers. However, the common theme among these professionals is that they help you make smart decisions with your money.
Many financial advisors hold professional designations and certifications like a CPA, Series 7, Series 63, Series 6, CFA, or other designation. A critical distinction among financial advisors is that only Registered Investment Advisors (RIAs) have fiduciary standards. A financial advisor with fiduciary standards is legally obligated to act in your best interest.
The Investment Advisors Act of 1940 dictates the professional standards for RAIs. The SEC or state securities officials regulate financial advisors. We recommend working with a true fiduciary so that they are continuously acting in your best interest. Here's how to choose a financial advisor.
5 Milestones to Consult With a Financial Advisor
Financial advisors can help you craft solutions to dealing with big and small money issues. Here are five life and money events that might make you want to talk to a financial advisor immediately.
1. Starting a Family
How much does having children cost? According to the U.S. Department of Agriculture, parents should expect to spend over $233,000 per child from birth to 17 years old on expenses like food, housing, transportation, child care, and other items.[1]
This data is for a middle-income, married couple with two children. The costs fluctuate based on individual circumstances and other variables.
These data are from a 2015 report (the most up-to-date USDA report on child expenses). Adjusting for inflation, the overall cost per child will be more than $270,000 in 2024. Consulting with a financial advisor about your financial situation will clarify whether you are ready to handle these costs.
A Financial advisor can help you create a financial plan and break down the total cost of children into annual and monthly expenses. Raising children is expensive, so managing a budget to keep you on track to meet your financial goals is vital. And if you want to keep your current lifestyle, you need to consult with your financial advisor about how to make more money and decrease your expenses.
2. Buying or Selling a Home
Whether you are trying to buy or sell your first home, real estate transactions can become complicated quickly. Having a trusted advisor in your corner to walk you step-by-step through the transaction can help you avoid financial blind spots.
Buying your first home can be intimidating for buyers, whether you are trying to buy a house, condominium, or townhome. Handling this transaction yourself can feel paralyzing. There is a tremendous amount of detail to consider, such as getting a home inspection, saving for your down payment, purchasing the appropriate home insurance, getting a mortgage, and even negotiating the price of the house.
On the flip side, there are many factors to consider when selling a home; you need to do your due diligence on hiring the best real estate agent, setting the appropriate selling price, picking the right buyer, and tax planning based on your short-term or long-term gains (or losses), and timing the sale based on purchasing another house.
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3. Getting Married
Getting married is one of life’s greatest milestones, and the average cost of getting married has skyrocketed. Without a plan, it can be easy to let the costs associated with the marriage process - engagement rings, wedding presents, event planning, invitations - get out of hand.
According to wedding planning website Zola, the average cost of a wedding in 2023 is expected to be $29,000.[2] Today’s couples are paying for their weddings through a combination of financing methods, including optimizing their credit cards, using savings accounts, and cash funds from friends and family via their wedding registry to help pay for their wedding. Planning your expectations for this phase of your life with a financial advisor will give you the clarity to ensure you don’t put yourself in debt.
While the wedding itself can be a massive financial expense, financial advisors can help you answer questions like:
- How much should you spend on a wedding?
- How much should you spend on an engagement ring?
- Do you need to save for a Honeymoon?
- Should you buy a home now?
Being thoughtful about when and where these questions fit into your financial future can give you the confidence to avoid financial pitfalls.
4. Receive a Major Financial Windfall
Your company is acquired, you receive an inheritance, or you make a fabulous investment and are about to get a large payout. Now what? Would you know what to do with all that cash (besides spending it)? If you are like most people, you would probably have an initial rush of excitement, followed by the anxiety of not knowing the best next move to make.
Types of Financial Windfalls:
- Increase in Income
- Selling Investments (stock, real estate)
- Inheritance
- Employee Equity Payout (Stock Options, RSUs, ESPP)
- Monetary Gifts
- Insurance Settlement
- Legal Settlement
Consulting with your financial advisor right away can give you a voice of reason in an unusual circumstance. Before quitting your job or making an extravagant purchase, the best financial decision might be to do nothing. Waiting to let the initial rush of a windfall fade can give you the mental clarity to consider your financial goals.
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5. Planning for Retirement
Retirement can sometimes feel far away. For those who don’t plan for retirement, it can feel out of reach. What is your vision for retirement? A financial advisor can help you contemplate how, when, and in what fashion you want to retire.
Many young professionals have given up on the traditional view of retirement or the idea that you completely stop working at a specific age. Instead, enjoying mini-retirements throughout your career has gained tremendous popularity.
Whether you subscribe to the traditional view of retirement or incorporate mini-retirements into your life, having a clear plan will allow you to break down your monthly and yearly savings goals. Mapping out your access to Traditional IRAs, Roth IRAs, or 401(k)s will let you take advantage of each of these along your retirement journey.
Speaking with a financial advisor when one of these events happens can be extremely helpful. Conceptual planning scenarios will give you a leg up. It is a smart money move to take advantage of access to a financial advisor and receive an independent voice of reason.
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Smart Summary
Finding the right financial advisor to work with can change your trajectory. You will reach life and money milestones faster by being proactive and informed. It is a smart move to meet with a financial advisor ahead of when you need to. Proactive planning is a winning money strategy. Whether you are investing in stocks, setting up a checking account, or saving for a slush fund, consulting with professionals is a smart money move.
(1) United States Department of Agriculture. Expenditures on Children by Families, 2015. Last Accessed January 27, 2025.
(2) Zola. How Much Does the Average Wedding Cost in 2023? Last Accessed January 27, 2025.
