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I am 21 years old and graduated from college and I obtained a decent job. I have read a lot about managing money, and I believe I could manage my own money by myself. I am interested in maybe going a different route and getting a financial advisor. Is getting a financial advisor a good thing? I am not too familiar with how they work, but I have heard about them.

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Some of the best advice I heard is that people have two jobs: The first is their chosen career, the second is to manage their own money.

An important part of managing your own money is decide upon goals. Do you want to do the standard work for 25-40 years and retire? Build wealth through real estate? Build wealth to later invest in a business? Live for today and spend as much money as possible for as long as possible? Have a family? If you do want children are you interested in leaving a legacy?

This leads to an important question: have you obtained a job that like with sufficient growth opportunity?

Those are a lot of questions for someone so young so it is best, at this point, to decide upon some fuzzy long term goals, but more specific short term goals. Some great short term goals, at this point in your life, would be to get out of debt. Have enough money saved for your next car. Have an emergency fund. Contribute x% of your income to your company 401k, and increase it by 1% every year. Those are just some examples.

So you may in fact want and need a financial adviser, but I doubt you need one now. They have a vested interest in steering you to products from which they make money. One of those could be life insurance. You probably don't have a need for much life insurance at this point.

So I would hold off, read some books, set some goals and see if you like investing on your own. I would also ask some trusted older adults on the steps one should take.

I would read three financial books, all available from the library, or used for cheap from Amazon:

The Millionaire Next Door

The Total Money Makeover

The Little Book of Common Sense Investing

  • +1 This answer offers good advice. I'd add that in the US, major banks provide a free consultations with a financial adviser. Take advantage of the offer. It may help your learning curve. But as Pete B. suggested, they have a vested interest in steering you to products from which they make money from, most of which can be obtained a lot lower cost. – Bob Baerker May 31 '18 at 17:43
  • @BobBaerker I would suggest the advice from the bank is not free. They steer people towards woefully inadequate and expensive products. – Pete B. May 31 '18 at 18:07
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    Perhaps the point that I implied was not stated clearly. Take advantage of the free meeting(s) with the bank's financial adviser to improve one's learning curve and then DIY at a much lower cost. – Bob Baerker May 31 '18 at 18:55
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A financial advisor that charges per hour and will assess your finances and give you advice (typically a subset of financial advisors known as financial planners) could be a good way to help you work toward your goals. A financial advisor that handles your investments for a percentage is harder to justify in general, but especially at this point in your career. I've met with an advisor that my folks use, ultimately he had nothing to tell me that I didn't already know, and if I had paid for it I would have been disappointed. However, my folks have benefited from his advice because they aren't like me, they would have overlooked things and it was helpful for them to have someone else craft a plan.

I'd argue that for someone just starting on their career there are enough good sources of information that you don't need an advisor. I know people that meet with a financial planner about every 5 years, research is time consuming, for many people having a touch-base with a professional can be a reassurance that they aren't overlooking anything significant. They'll discuss current financial situation, goals for the next 5+ years, and tweak their plan as needed. This, to me, is the most appealing option for those that don't want to spend much time doing their own research.

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If you get a financial advisor, only hire a fiduciary. A fiduciary is legally obligated to work in your best interests.

Part of the decision is understanding yourself. There are lots of very smart people who do not manage their money well. You need to both learn about personal finance and be disciplined about saving. Are you actually going to read some books on personal finance, or do you need someone else to inform you? Do you save on your own, or do you need someone else to plan for you so you do? If you cannot do these on your own, financial advice can definitely be worth it. The difference between good financial choices and bad choices is far greater than some by-the-hour fees.

If you are a strong self-motivator, you don't need a financial advisor. Read up, be disciplined about saving, use tax advantaged accounts, and select investments while understanding risk and time horizons.

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Unless you're juggling around several hundred thousand dollars/pounds/euros, it's overkill to "have" a financial advisor.

I daresay you would be able to find some "advisor" who will let you pay them for having a general chat about money with you a couple of times a year -- but that won't be something you need, if all you have to worry about is a general salary-earning economy, perhaps home ownership, and some pension savings.

Most adults manage fine by themselves by keeping (critical) track of free advice from papers or the internet, just relying on salespeople from banks and other companies that provide services you need, plus a bit of common sense.

If you're about to engage in something particularly large and complex -- buying a house, for example, or setting up a retirement account -- then it can be a good idea to pay for some sparing from an independent professional for that specific purpose. But that's something different from "having" a financial advisor just to have one.

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