A couple talking with their Financial Advisor.

Do you need a financial advisor in your 20s and 30s?

If you’re a recent graduate or even well into your career, investing and saving for retirement might not be on your radar. You’re likely focused on immediate goals like managing your finances or maybe saving for a house. You may think a financial advisor is only for investing or retirement, but they can be a resource for your short-term goals as well. And, creating a plan for reaching your long-term financial goals is always a smart move, regardless of your age or income. Here’s how a financial advisor can help you get started.

What is a financial advisor?
From robo-advisors to financial planners and brokers, financial advice comes in many forms. The most common types of advisors can be grouped into three categories:
  • You can meet with a financial planning professional in-person to discuss your goals and plans. Technically, a financial advisor is someone registered with the financial services industry, but there are financial planners and money managers that can also help.
  • A robo-advisor is a digital service that can manage your investments and/or offer financial planning. They typically gauge your investment preferences through a survey and then use an algorithm to determine the best way to invest your money.
  • Some companies offer a combination option of guidance from a professional and robo-advising tools. The day-to-day maintenance of your portfolio may be handled digitally, while a professional is available to answer any questions or meet with you to discuss options.
Companies will offer different options for working with an advisor, whether that’s in-person, over the phone or online. Consider what works best for you as you navigate your options.

What does a financial advisor do?

Basically, a financial advisor can look at your overall financial situation and help you plan for and work toward your short- and long-term goals. While some advisors are entirely focused on investing, many focus on the following areas as well:
  • Creating a savings plan for both your long-term and short-term goals
  • Retirement planning
  • Mortgages and home equity solutions
  • Insurance reviews and advice
  • Tax-saving strategies
  • Banking solutions
  • Strategies to protect your assets
  • Estate planning
When should I start working with a financial advisor?
It depends on your situation and goals, but there are benefits to working with a financial advisor early on. Initially, a financial advisor can help you prioritize goals like eliminating debt and building an emergency fund. An advisor may also be able to help you make decisions about health and life insurance coverage.

As you advance in your career and your income grows, your saving and investment opportunities may also expand, and your advisor can help you make decisions as your situation changes. As you face new events, like saving for a house, planning for a baby, or managing a bonus or an inheritance, a financial advisor can provide ongoing guidance by helping you adjust your strategy and reassuring you of your progress.

They can also help you start a retirement plan. The sooner you begin planning and saving for retirement, the more time your retirement fund has to grow and support your ideal retirement lifestyle. An advisor who understands your overall financial picture can provide education and guidance related to areas like your employer’s retirement plan, including how much to invest, and which types of investments make sense for your current life stage.

How much does it cost to work with a financial advisor?
There are a variety of ways that financial advisors are compensated, and it’s important to understand how your advisor is being paid. Often called fee structures, advisor costs generally fall into these categories:
  • An hourly, monthly or other agreed upon rate
  • A percentage of assets managed
  • Commissions on securities and financial products sold
  • A combination of the above
Keep in mind that one fee structure is not necessarily better than another. The key is to work with an advisor who supports your best interests and whose fee structure makes the most sense for your unique situation.

How do I find the right financial advisor for my needs?

Start by making a list of the services you think you’ll need, such as personal budgeting, investing and retirement planning. You’ll want to find an advisor who has the experience, knowledge and training in the services you’re seeking. A financial advisor who shares your vision should take time to understand your big picture goals. Regarding investments, an advisor should suggest an investment allocation that’s in line with your risk tolerance and help you understand the strategies behind your investments so that you stay fully informed. For more on how to find the right advisor for you, consider reading "Six questions to ask to find the right financial advisor."

Financial advising isn’t only for ambitious investors or those about to retire. It can be a great resource for meeting your goals now and setting yourself up for success in the future. And sometimes, it helps to talk it through with an experienced professional. For more information, contact your local Commerce Bank branch to be introduced to a Commerce Brokerage Services1 Financial Advisor.

1 Commerce Brokerage Services, Inc., Member FINRA/SIPC, is a wholly-owned subsidiary of Commerce Bank.

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