3 Signs That You Need to Start Paying a Financial Advisor

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Deciding when to pay for financial advice is a complex situation. Not everyone wants to hire an investment advisor or financial planner; some people prefer to manage their own investments and take a DIY approach to financial planning.

But the world of money can be complicated, financial decisions can become high-stakes, and you don't have to go it alone.

Financial planners are not just for "rich" people. Anyone can hire a financial planner, even for a few hours of advice, even if you have no savings and are struggling with debt. Financial planners aren't just for managing investments -- they can help you with the fundamentals of budgeting and building an emergency savings fund.

If you've recently gone through some big changes in your financial life, hiring a financial advisor could become even more of a must-have. Here are a few tell-tale signs that you should think about hiring a financial advisor.

1. You got a big pay raise or promotion at work

If your personal finances have changed for the better, this could be a sign that you're ready to hire a financial advisor. Paying for financial advice can be a good move if you want to know what to do with a big annual bonus at work, or how to make the most of your new higher salary.

Fiduciary financial planners can look at the total picture of your personal finances, see how much you're saving, and help you make smart moves to invest for the future while enjoying life today. If your salary just went up by a big percentage, this could be a good time to hire financial advisory help.

2. You received an inheritance or financial windfall

Sometimes people's financial lives change for the better, almost overnight. If you've received an inheritance from a deceased family member, exercised stock options in a startup, sold a business, made big capital gains in the stock market, or otherwise come into a big amount of money, this can also be a good occasion to get professional financial help.

Financial advisors can help you understand the possible tax implications of your windfall, and make sure you don't get hit by a surprise tax bill. They can also help you decide how to allocate your one-time cash influx, like how much to put toward long-term investments like retirement accounts, short-term cash savings, and other financial goals like paying off debt.

3. Your total investment assets have reached a psychologically significant level

According to investment firm Fidelity, the number of Fidelity customers with $1 million or more in their 401(k) accounts recently reached an all-time high. You don't have to be a millionaire to hire a financial advisor. But if your 401(k), IRA, or brokerage account has recently reached a big number (like $100,000 or $50,000), you might want to use this occasion to hire a financial advisor.

Watching your investments grow is always good news. But as investment gains get bigger, the decisions about how to invest your money might feel more fraught with risk and complexity. How risk tolerant are you, really? Do you want to rebalance your portfolio to lock in some gains, or stay the course with an aggressive allocation?

A fiduciary financial advisor can talk with you about your financial goals, look at the overall picture of your financial life -- age, income, monthly spending, savings rate, risk tolerance, and target retirement age. Getting financial advice from a professional can help you decide how to manage your investments for long-term success.

Where to find financial advisors

Many people working in finance call themselves "financial advisors" or "investment managers," but they're actually more like salespeople. They might offer some good advice, but they make money based on selling financial products -- and that business model is not always the best fit for the financial advice you need.

If you want the most unbiased, relevant financial advice without high-pressure sales pitches -- it's best to hire a fiduciary financial advisor or Certified Financial PlannerTM (CFP®). Being a "fiduciary" means the financial advisor is ethically obligated to put your financial interests first, and not just sell you financial products.

Here are two websites where you can find fee-only fiduciary financial advisors near you:

• National Association of Personal Financial Advisors: NAPFA.org

• Find a Certified Financial PlannerTM professional: letsmakeaplan.org

Some of the best online brokerages offer financial advisor services, sometimes for free. Here are a few good places to look:

• Betterment: Betterment is one of the best robo-advisors, and also offers unlimited support from CFP® professionals -- you must have a minimum investment balance of $100,000 and pay a 0.65% annual fee.

• Fidelity: Fidelity Go® robo-advisor investors can get access to coaching once your balance reaches $25,000. With a minimum investment of $50,000, you can get access to phone-based advice from the team at Fidelity Advisory Services.

• Fruitful: This fintech platform (fruitful.com) gives you access to dedicated financial advice from CFP® professionals, a high-yield savings account, and tailored investment portfolios with no management fees.

• SoFi: SoFi Invest offers free financial advisory services from CFP® professionals.

• Vanguard: Vanguard Personal Advisor® offers robo-advisory automated investing with access to human financial advisors. This service is available to investors with minimum assets of $50,000, and the annual advisory fee is only 0.30%.

Bottom line

Financial advisors can help you navigate the complex questions and big decisions of making investments and managing money as you (hopefully) get wealthier throughout your life. If your finances have changed for the better, or if you have questions about budgeting, saving, and paying off debt, financial advisors can help.

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