I’m a new investor in my 30s. Should I hire a financial adviser?

I’m a new investor in my 30s. Should I hire a financial adviser?

April 18, 2023

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I’m considering engaging a financial adviser to help me with my finances, but I don’t know whether that’s a good idea or what I should look for. How do I find a ‘good’ one? Is it worth it? I’ve heard some horror stories that make me nervous. I’m in my early 30s, I’m single, and I have a decent salary. I feel like I’m pretty good at saving money, but I’m new to investing and don’t understand things like superannuation or insurance.

The first thing I’d encourage you to do is spend some time educating yourself about the areas of finance you don’t understand. You don’t have to become an expert, but having some foundational knowledge is going to help you feel more confident in talking to a professional.

Don’t assume a financial advisor will automatically sort out your mess for you. It pays to do your research and be prepared.Credit: Simon Letch

The mistake many people make is going to an adviser with no idea what they’re doing or what they need help with, and hoping the adviser will do their magic and sort out their mess for them.

Now, you might be thinking, “Yes, of course, isn’t that the whole point?”

But this is a dangerous approach because it puts all the power in the financial adviser’s court.

You won’t have the knowledge to interrogate their recommendations or ask good questions, or the confidence to say ‘no’ to suggestions you aren’t comfortable with. You’ll more or less have to blindly trust whatever they tell you. That’s never a good position to be in.

Ideally, you want to have a collaborative relationship with your financial professionals. This means you ask good questions and actively participate in decision-making, and this requires a baseline level of financial understanding on your part.

I’ve repeatedly seen that when people invest a little effort into understanding their finances first, it lends itself to a much healthier and more productive relationship with a professional later on.

So, before working with a professional, ask yourself these three questions:

If you answered no to all three questions, you might benefit from doing a bit of homework before working with a financial adviser.

Now, say you’ve done the above and are ready to work with a professional. Let’s talk about what that process can look like.

When it comes to selecting an adviser, treat it like you’re hiring someone for a job – because you are. So, how would you go about hiring someone?

You would first create a ‘job description’ after thinking carefully about what specific jobs do you want them to do, and what are your ‘requirements’ vs your ‘preferences’?

When it comes to hiring a financial adviser, this might mean:

  • Getting clear on what you want help with, as well as what you do not want help with (so you don’t get ‘oversold’ by signing up for everything they have on offer).
  • Identifying any specific experience you might require (some financial advisers work a lot with aged care clients, self-employed clients, or real estate investors etc).
  • Setting a rough budget of what you would be happy to pay for the advice (this might take some research to figure out what is reasonable to expect).

This planning process will help you feel a lot more confident during the initial consultation because you’ll have some idea of what you’re looking for.

Many financial advisers provide an initial consultation for free, where they might discuss what you want help with, how they can help, and maybe also share their fees.

This is your opportunity to ‘interview’ them as well, so don’t feel shy to ask them questions that will help you assess whether they might be a good fit for you.

Also, don’t just go for the first one you talk to. Do at least 2-3 consultations with different advisers to get some perspective on how different advisers work, and how their process, fees and recommendations might be different.

All of this might sound like a lot of work, but remember that this is someone who could have a massive impact on your financial position (for the better, hopefully). Said another way, it’s a decision that could be worth tens of thousands of dollars (or more), so isn’t it worth taking the time to get that decision right?

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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