It is confusing for many to navigate personal finances. It often leaves you with your head spinning. For some, hiring a financial analyst may be worth the cost. For others, it may be an unnecessary service. Take a look at the following paragraphs to help you decide if you should hire a financial analyst

What is a Financial Analyst?

Financial analysts do financial management and risk management. They are employed by mutual and pension funds, hedge funds, securities firms, banks, investment banks, insurance companies, and businesses. They also analyze financial data, spot trends and develop forecasts. A degree in accounting, finance or economics is required for this role. 

How Much Is The Cost?

Financial analysts vary in cost and experience. Their fees differ from professional to professional. Ask immediately how your advisor is compensated when you first meet. He/she may charge an annual retainer to yearly manage your finances. This fee is about a couple thousand dollars. You also could be charged a percentage of your total account balance. The profession usually charges between 0.25%-1% per year. A financial advisor may also charge a few hundred dollars. Some advisors are paid through commissions. They offer “free” services, and earn commissions from the financial services they will try to sell you.

When Should You Hire One?

Financial management is troubling for anyone, no matter how much money he/she makes. Typically, financial analysts do not work with a client until he/she has $100,000 of investments. Some will take on a client with just $50,000 of investments. Others, only work with clients who have $500,000 to $1million of investments. When you have a lot of money in investments and it’s becoming too much for to you manage on your own, then it’s time to hire a financial analyst.

Why You Should Hire a Financial Analyst

There are a number of reasons why you should hire a financial analyst. Finances are difficult to manage. It’s frustrating to decide which investments or funds are best for your money. There needs to be a lot of research, analyzing and forecasting that goes into deciding what to do with your money. Many of us just don’t have the time to put into proper financial management. A financial analyst will do the work to find the best ways for you to handle your money.

Investing Help

A financial analyst helps you decide what investments are right for your money. Some investments are risky and cause you to lose money. If you’re looking to invest conservatively, a professional will tell you which investments to avoid and which low-risk opportunities have the best long-term results. Ask yourself these questions before you meet with your advisor: Why am I investing? How much am I willing to lose? What do I hope will happen from these investments? Your answers to these questions will help your analyst decide which investments are right for you.

A financial analyst helps you decide which investments are right for you.

A Third Party View

Financial management is difficult. Whether you’re planning for retirement, investing in the stock market or anything else, a second pair of eyes can make sure you’re doing things right. Everyone makes mistakes. However, most financial mistakes translate to losing vast amounts of money. A financial analyst’s expert eyes can locate mistakes and fix them before your money is affected.

Financial Advice

There are times when we all need advice. Financial analysts can answer specific questions you have about your money. They answer questions about long-term financial goals or investing in assets you don’t know much about. Financial analysts generally do not work with people who have a lot of debt or are only planning a strict monthly budget. 

Why You Should Not Hire a Financial Analyst

There are reasons why hiring a financial analyst is unnecessary. Some of them are listed below.

  • Financial advice is everywhere. There are books, magazines and websites that are easy to find. You can search your topic and discover a multitude of advice on a variety of subject matters.
  • If you are content with your money and where you’re at financially, then you do not need a financial analyst. If you know where your money is going and what you need to do to get it there, then you have the knowledge to make top-notch financial decisions.
Financial books, websites and magazines can help you make decisions about your money.

Research

According to theretirementspot.com, 90%  of managed mutual funds will not do better than their index counterparts. An individual can easily invest in an index without the help of a financial analyst. This research shows they may underperform or take on too much risk for their clients.

Your Choice

It is your choice whether or not you want to hire a financial analyst. They can be costly, but have a wealth of financial knowledge to help. Ask your analyst how he/she is compensated for his/her work for your first meeting. Financial analysts often require that you have a certain number of assets before they work with you. You can always learn about finance through books, websites or articles if you decide not to hire one. The choice is yours whether to hire a financial analyst or not.

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