When I made the decision to begin putting money away for retirement, I honestly had no idea where to begin.
I didn’t have a 401(k), an individual retirement account (IRA) or a health savings account (HSA). I didn’t even use one of those apps that round up purchases and invest the spare change. I was starting completely from scratch.
I presumed hiring a financial adviser was required to get started investing.
So I scheduled a meeting with one who offered to see my husband and me at no charge — charming, right? — and we spent hours while he outlined four different investment choices.
I walked out more bewildered than when I walked in. I simply wanted to hand him my money. But it needed to funnel through numerous people before it could be invested, and apparently we needed another appointment.
At that follow-up meeting, I learned how he earned his money: a 5% commission on every contribution I made. I realized that if I handled this myself, even with potentially lower returns, I might come out ahead after avoiding his commission.
That was the moment I understood I didn’t have to rely on a pro to begin investing.
When Can You Go Without a Financial Adviser?
If you’re just getting started and don’t face complicated circumstances like a large inheritance or a six-figure salary, you can do well handling things on your own for a while.
However, if you plan to manage your own investments, you must be willing to learn the basics of investing. Fortunately, there’s a vast amount of resources online.
Savinly offers many pieces to help you begin saving for retirement that break down topics such as:
- How to build your retirement savings.
- Why contributing to your 401(k) matters.
- The distinctions between Roth and traditional IRAs.
- Why health savings accounts can be powerful retirement tools.
- What types of investments are inside those retirement plans.
If you’d rather read a book than scroll through articles, I suggest “The Simple Path to Wealth” by JL Collins. It covers the essentials you need to comprehend basic investing ideas without putting you to sleep.
As long as you keep adding money to your accounts and nothing dramatic happens, that’s when—if you feel comfortable—you can manage things yourself.
But how do you know it’s time to hire a professional?
When Is Hiring a Financial Adviser Necessary?
I spoke with three planning professionals who act as fiduciaries — meaning they’re legally required to put their clients’ interests first. (I know: why isn’t that standard everywhere?) They helped clarify when professional guidance is truly warranted.
Paul Ruedi of Ruedi Wealth Management focuses on retirement planning. He believes one of the prime times to consult an adviser is before or during the shift into retirement.
“Moving into a life without a steady paycheck involves a lot of complex choices,” Ruedi said. “Also, a person’s investment balances are likely at their largest ever, which magnifies every market movement and can make investing feel very emotional.”
When you’re deciding how to stretch your portfolio across decades, when to take Social Security and how to withdraw from accounts most effectively, it’s a good time to bring in a guide.
Sometimes you’ll need help long before retirement approaches.
Kayse Kress, a certified financial planner at Physician Wealth Services, says many people gain from having an impartial perspective.
“Even very intelligent people can struggle to keep emotions out of financial choices,” Kress said. “You might benefit from partnering with an adviser who offers objective guidance and helps you make more prudent financial decisions.”
The clients who gain the most in Kress’ practice are those too busy to dedicate time to crafting a financial plan.
But a major reason people don’t get help has historically been the difficulty and cost of finding a planner.
“Not long ago, if you didn’t have a sizable sum to invest, it could be hard to get anyone in the financial services world to work with you,” Kress told me.
However, with the growth of fee-only planners, more people can access professional assistance at various stages of their financial life.
Chris Hutchins, co-founder and CEO of online planning service Grove, has observed many scenarios where engaging a planner well before retirement was wise. Examples include:
- You’re uncertain whether you’re saving enough or if you’re on pace to meet your retirement targets.
- You don’t know what your objectives are or how much you should be putting aside to reach them.
- You’ve meant to address your finances for ages, yet nothing has changed.
- You’ve experienced an abrupt financial windfall (an inheritance, a business sale, etc.).
- The anxiety of trying to determine if you’re on track or making the right money moves is overwhelming.
Regardless of your age or investing knowledge, there’s no excuse not to plan for retirement. For some people, that means doing it themselves. For others, it means hiring professional help.
Thankfully, options exist so everyone can get the support they require.
Jenna Adams is a staff writer at Savinly. She frequently covers retirement topics and shares tips on saving and paying down debt on Instagram at @savingwithspunk.
