Do You Need a Financial Adviser?

Not everyone needs a financial adviser, but they can help people get their financial lives in order. Some financial advisers work clients on positioning all of their finances, while others simply guide them in the right direction. So how do you know if you need a financial adviser in the first place? And if you do need one, how do you know who to hire?

You Probably Don't Need a Financial Adviser.If you're the type of person who keeps track of every penny, knows exactly how much is saved for retirement, and have a diverse investment portfolio, a financial adviser may not be worthwhile. However, a financial could come in handy if you just want someone to double check your financial setup.

If you prefer to do things themselves, there are many resources available online to help you create and stick to a budget, choose investments, and plan for retirement. Look for retirement planning calculators and other free tools that can provide suggestions based on your unique situation.

You Could Benefit From a Financial Adviser. On the other hand, if you aren't sure where your money goes each month, don't have time to research investment options, or don't know how much you should be saving for retirement, an adviser may help.

Reliable and quality financial advisers are trained to deal with a variety of personal finance concerns, and can help you set priorities that enable you to reach your goals.

Their suggestions may involve everything from budgeting and savings to sound investments and how each financial decision will affect your taxes.

How to Hire a Financial Adviser. If you decide you could benefit from the services of a financial professional, do some research to make sure you're hiring a reputable adviser who can improve your finances rather than damage them.

You don't want to just hire the cheapest financial adviser you can find, nor should you assume the most expensive adviser will provide the best service.

Verify the adviser's credentials: Anyone can call themselves a financial planner or adviser, so you want to ensure the person you are considering has actual experience and knowledge. Do they have a CFP after their name? If so, this means they have a Certified Financial Planner certification and have gone through a high level of financial education to obtain the credential--at least three years of education.

Look for fee-only advisers: If a financial adviser makes a commission every time their customer buys a financial product, then it is in their best interest to try and sell you as many financial products as possible. Instead, you want to work with advisers who earn money through charging an hourly rate or a fee for their service instead since getting paid commission on sales just encourages them to try and sell expensive financial products rather than make decisions based on what's best for your financial situation.

Choose an adviser with the right specialty: Most important to the success of your adviser-client relationship is choosing an adviser with a specialty that matches your needs. Are you looking for someone to help you plan for your retirement, or do you need someone to help you manage your newly married financial situation? Ensure that the advisor's expertise caters to your financial goals.

Debbie Dragon is a contributor to MyBankTracker.com, where she writes about savings rates, personal finance, and banking.