At What Level of Wealth Should You Hire a Financial Advisor?

June 4, 2023

With so much access to free financial information, it can be hard to know when you might need a financial advisor. In this highlight, we break down what you should know if you are considering hiring a financial advisor.


We do have a question up next from Luke. He says, “At what level of wealth is it worth meeting up with a financial advisor? I currently contribute to Roth 401k and HSA and have those in Target Date funds and the S&P 500. Should I be trying to better optimize? What’s the next step?”

You said, he said he’s doing Roth 401k, HSA, and, uh, those are in a Target Fund and the S&P 500. Okay, so the question is, okay, what level of wealth… let me, so we get this question all the time, right? And a lot of folks say, “Hey, well, I’m young and I’m starting out, that’s why I need a financial advisor the most. I don’t know what I need to be doing, I don’t know where to be putting my dollars, I don’t know what I should be doing.” And this is a stance that we’ve taken. We think that technology has changed the world. There are now access to any financial question you have at your fingertips. You have books, you have blogs, you have podcasts, you have YouTube channels. There are so many free resources out there available where you can get sound financial information. And the simple fact of the matter is, early on in our financial journey, things aren’t all that complicated. We need to save for tomorrow, spend less than we make, make sure we have appropriate risk management, make sure we have emergency reserves. It’s just not the most complicated thing in the world to do. So what we tell folks is, when you’re early in the accumulation phase, when you’re early in your building phase, every dollar that you can put together is going to be much better served going towards your army of dollar bills or funding those goals than paying a financial advisor. And by the way, that’s us included. We are financial advisors, so we’re literally telling you, “Hey, your dollars are going to be better going towards those goals than coming to pay us a fee.” Now, we do believe there is a point when your assets and your circumstance do reach a critical mass where now there are some other things that you should be focusing on. Maybe now, instead of a Target retirement index fund, instead of a general investment solution, you need a specific investment solution. You need a portfolio that focuses on your unique goals, your unique risk tolerance, your unique risk capacity, your unique horizon that you’re trying to work towards. And you want to focus on things not just like asset allocation, how I spread out the assets, but also asset location, what types of buckets I put the assets in. When your situation gets to the point where an advisor can step in and add value in those areas, that’s probably the point where it makes sense to begin seeking out a financial advisor. Before that point, we just think that your dollars are so valuable, they can be better deployed elsewhere than paying advisory fees.

I think this is, you’re going to know, Luke, because no matter how simple you try to make your life, complexity finds you with success. A lot of people, I think, they get a financial advisor, we’ve self-inflicted this wound upon ourselves. The only thing you think of when you think of a financial advisor and all the big wire houses and all the big low costs like the Vanguards, the Fidelities, and those, they’ll have what they say they’re going to put you in touch with a financial advisor, but really they’re just doing asset allocation and investment stuff. That’s a component of financial planning, but true financial planning is going to help you out with the more the cash flow-type stuff. The, you know, how to do retirement well, risk and stress test the retirement, you know, looking at your tax return to make sure it’s structured in a way. We’re not trying to take the tax prep business away from your preparer. We’re trying to just help you partner to make sure you’re not missing out on opportunities.

Because coming from a public accounting background, I know most CPAs, they’re great with money, but nobody’s actually walked them through how retirement plans work, how you can maximize this to interconnect it. I mean, heck, if you saw how many times we have to give guidance on the Form 8606, which is where you disclose all your IRA contributions, every single one, it’s, you’ll see that this is, you don’t have to, it’s just going to happen. You’re going to get so successful if you do what we share.

I just can sit back and wait for the abundance cycle to release because you will. I look at my own tax return and I’m like, “Man, I, I don’t, I, I do not,” because I have this hunger and desire to have a simple life financially. But now I have K1s, I’ve got real estate, I’ve got, you know, the kids, I’ve got retirement upcoming, now estate planning. Bo knows because I’m decided to redo my estate plan this year. And, um, and the attorneys told me what I need to do, but I just, I’m having a hard time. I, I won’t digest time on it.

I just was sitting with a client, very successful client, um, just last week, and I said, “Look, you’re in the same situation I am with your estate, that, you know, the attorney is telling you you need to make this move right now because this rule is going to sunset in 2025, and I don’t want you to have enough time to think about what that means for you and your family, because when you start using the word ‘irrevocable,’ it’s kind of scary. So you need to have time.”

So it’s nice to have a tour guide or somebody who’s actually has some experience in that because realize, you’ve only got one retirement, one chance to do this in the right way. Why not bring somebody in who’s actually had experience of doing this for hundreds, if not even potentially a thousand times before? So there’s some experience shares, there’s also some wisdom from it. And like I said, I love that I actually get to share with our clients some of my own struggles.

Because you will get into Roth conversion strategies, you’ll get into how we don’t screw Social Security up with, you know, you’ll be able to get into the QCDs on how and how we maximize all the charitable giving in a really efficient way. There’s a lot of cool things that financial planners get to do. So I don’t worry whenever you guys, you know, write the comments, troll comments, I’m still feeding the trolls from time to time. And they say, “Why would I ever hire anybody? I’ll just, I’m going to keep buying.” They usually always do the Vanguard Total Market Index or something like that. I’m like, I just chuckle. I’m like, “Oh, give it time, you know, keep feeding them. Let them, they’re gonna get so big that one day I’m like, ‘Man, this is a lot more than a thought,’ and then we’ll be there waiting.

That’s why the abundance cycle works. We can love on you for years at a time. We know that simplicity will be fleeting with success. And if you’re someone who’s thinking, “Okay, that sounds like me, maybe I’m at that point,” we’d encourage you to go check out the website and go to moneyguy.com and go to aboundwealth.com. Check out the work with us, see who we are, what we do, who we work with and we would love to potentially be a part of your financial journey.

Want to know what to do with your next dollar, you need this free download: the Financial Order of Operations. It’s our nine tried-and-true steps that will help you secure your financial future.



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