Do I Need A Financial Advisor for My $74k Portfolio?

A Reddit user is very undecided about whether he should hire a financial advisor to help him manage his $74,000 portfolio. The original poster (OP) has $73,907 in his investment account. He explained that he made $2,330 on his account last year, but he paid a $922 management fee on his account, so he ended up giving away 40% of his gains. The management fee was high beause it was based on the amount of assets he had under management. 

He’s not sure if he needs to continue paying his advisor, despite losing a good portion of his returns to fees, or what his best course of action is moving forward. So, what should the OP do in order to shore up his finances, and should he give up on the idea of getting professional advice due to the cost?

Working with a financial advisor is smart — but you need the right one

The Reddit poster isn’t wrong about not wanting to pay a percentage of all of his assets under management to a financial advisor.

While this is a common way that some advisors charge, it can get expensive, and it may not be justified. Advisors that charge on a percentage basis can end up taking a good portion of your gains over the years, and it isn’t always worth paying such high fees unless the advisor is providing investment advice that very consistently helps you beat the market and do better than you could investing in index funds.

However, the services of a financial advisor can be invaluable if you find the right one. If you work with. fee-only financial advisor, your advisor can help you to:

• Understand how to allocate your funds among different investment accounts to maximize your tax benefits and be as prepared as possible for your future. 
• Help you to make informed investment choices that expose you to the right level of risk given your retirement timeline, while maximizing the potential ROI that you can earn
• Assist in getting a big picture view of your finances so you can make sure you are on the right track with your short-term, medium-term, and long-term goals. 

Far too many people don’t get the advice that they need, and they end up losing out on returns they could have earned or tax breaks they should have been able to claim.

Since the OP isn’t 100% confident about his financial management and since he has a good start with his investments and the potential to build true wealth, finding a fee-only financial advisor that charges a set fee, rather than a percentage of assets under management, is likely going to be his best bet. 

Get financial help, but understand the terms

No one, including the OP, should shy away from getting the help they need from a financial advisor if they aren’t 100% sure of what they want to do with their money. However, the key is to make sure you understand both the services that your advisor is providing and the fee structure. You need to be comfortable with both to confirm that you are getting a good value for the money you are spending.

The OP should look into his options, find someone who can help him for a fair fee, and fire his current advisor so he stops losing 40% of his returns — and anyone else who needs help preparing for their future should do the same. 

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