Many people assume that they need a financial planner because everyone else seems to either have one or think it's a good idea. The truth is that some people benefit from having one while others do not. In this article I'll focus on the type of people that need a financial planner vs. the type of people that don't so you can decide for yourself if having one would be a good fit for you.
First, it's important to understand what a financial advisor does for you. Their job is to help understand your investment objectives and needs in retirement. They then help you with savings goals and an investment plan to help you reach your goal. Some advisors will even help outside of this area with life insurance recommendations and even personal budgeting help. It depends advisor to advisor on how many services they assist with. That being said let's look at who benefits by using a financial advisor.
People who gain the most by using a financial advisor are those that lack investment skills. If you're not great with numbers and have a hard time using Excel, it's probably a good idea to let someone else do that for you. People that have trouble developing and sticking to a plan will also find the services of a financial advisor helpful. One of the greatest benefits of hiring a financial advisor is that you get to make someone else do the work and management for you. If you're very busy and don't have the time to manage and monitor your investments on your own, it makes sense to let someone else do it.
That being said, one of the great disappointments of the financial industry is that financial professionals rarely beat the performance of stock market index funds. Many experts argue that if you just invest in a S&P 500 ETF for instance, you'll beat most money managers out there. Also, many financial advisors use a cookie cutter approach to choosing clients investment options. They typically give you a questionnaire to fill out and then allocate your portfolio by the results. For these reasons, some people decide to go at it on their own. This makes sense if you're the type of person that is good with numbers and is advanced in investing on your own. If you also have the time to manage and track your own accounts, you can certainly do it on your own. I'm sure many financial advisors would thank you for managing your own money instead of calling them up every day to trade in and out of funds actively. This kind of investing philosophy can also incur lots of load and exit fees if you move in and out of investments a lot. This is yet another reason you would be better on your own.
In closing, take a good account of yourself and ask which of these types of people you are. It can also be helpful to ask your closer friends and family which type they think you are. Once you're aware which category you fall into, you can make an informed decision where everyone wins.