News
Here is my client’s average net worth
Limão_tm / Getty Images / iStockphoto
Are you thinking about hiring a financial advisor, but aren’t sure if it’s worth it for you? net worth? Different financial advisors charge different fee structures, and many specialize in working with lower- or higher-net-worth clients.
Check out: Barbara Corcoran’s 5 Best Passive Income Ideas
Read next: Become a Real Estate Investor for Just $1K Using This Bezos-Backed Startup
As you explore hiring a financial planner or advisor, keep the following pros and cons in mind.
Rich people know the best financial secrets. Learn how to copy them.
Average Customer Net Worth
“I work for a financial advisory firm with around 1,500 families and $2.7 billion in assets under management,” explains the portfolio manager and Chartered Financial Analyst (CFA). Nathan Winklepleck. “Our average client has $1.8 million, but this is skewed by larger accounts, like one with $150 million. I would say the average net worth is closer to $1 million.”
Jay Zigmont, a Certified Financial Planner (CFP), is even more specialized. “At the Wealth without children, we work with people without children and with higher net worth. Our customers tend to average over a million.”
“As CEO of BlueSky Wealth Advisors, I have had the privilege of working with a wide range of clients,” says CFA David Blain. “We work with everyone, from those just starting their financial journey to high-net-worth individuals. On average, my clients’ net worth tends to range between $1 million and $10 million, although we also serve ultra-high net worth families and significantly larger portfolios.”
Chad Willardson, founder of Capital of the Pacific and the long-standing CFF (Certificate in Financial Expertise), serving an even richer clientele. “At Pacific Capital, we work exclusively with people with net worths of eight and nine figures or more.”
When should you hire a financial advisor?
While these averages start at $1 million for some companies, remember that they are just that: averages. Half of your clients probably have a six-figure net worth.
“In my opinion, anyone could benefit from hiring a financial planner for a fee, especially when they are young,” says Winklepleck. “This helps ensure they save on taxes and make wise investment choices. However, clients with low net worth (i.e., less than $100,000) should almost always look for a robo-advisor or some other low-cost investment custodian like Vanguard.
“Why? You’ll pay little in investment advisory fees, so you’ll get almost nothing in service. If you get the service, that means you’ll probably be paying a lot more than a standard 1% fee – likely hidden in investment products. bad investments, such as annuities and other insurance products. And almost always at this level, the only advisors who will work with you are those who are just starting out; , more than a decade.
The story continues
Blain adds his own cents: “In my opinion, it’s worth considering a financial or investment advisor if your net worth is around $500,000 or more. At this level, financial decisions become increasingly complex and professional guidance can provide substantial benefits in optimizing investments, tax strategies and financial planning.
“For those with simpler financial situations or smaller portfolios – typically below this threshold – a robo-advisor may be a more cost-effective solution. Robo-advisors are excellent at providing diversified investment strategies with minimal fees, which can be particularly beneficial for younger investors or those with simple financial goals.”
Pros and cons of hiring a consultant
Hiring a financial planner or advisor comes with an obvious disadvantage: paying their fees. However, you may pay a flat fee for help with planning rather than an ongoing percentage to manage your investments. More on this soon.
What other pros and cons should you consider before hiring a consultant? “The advantages lie in personalized financial advice specific to your needs and in building a trusting relationship with a professional with experience in wealth management,” explains Willardson. “There are generally no cons, but it’s important to make sure you work with a fiduciary who puts your interests first, and not a broker who just seeks to earn commissions by ‘selling’ your investments that aren’t right for you.”
Blain adds “Advisors offer personalized strategies tailored to your unique financial situation – something I have implemented through personalized tax strategies, investment optimization, and financial and estate planning services. However, cons include higher fees and potentially minimum asset requirements. Human advisors may also have conflicts of interest depending on their compensation models, unlike robo-advisors who operate on a fixed fee structure.”
In addition to choosing and managing your investments, advisors can also rebalance them and practice tax-loss harvesting to minimize your taxes. Perhaps most importantly, they can dissuade you when you try to panic sell during a market downturn.
Starting with a Flat Fee Model
Many investors begin to wonder about hiring expert help as they reach a net worth of $250,000 or $500,000. They question whether the benefits outweigh the costs.
Fortunately, you don’t need to hand over all your money to professional management (and pay the associated fees). You can pay a flat fee for periodic advice and help plan long-term financial goals.
“Maybe you can just do a ‘check-up’ with a CFP to identify what’s working and what could be even better,” suggests Zigmont. “We offer a Child-Free Wealth Check-up for $500, for example. In our check-up we gather a lot of information about your current situation, life and goals. We then identify areas for improvement, areas where working with a professional can help, and areas where you can do it yourself.”
Willardson notes that “Having an experienced wealth advisor is important at any income level. If you are at the beginning of your financial journey, having a plan is much more important than having someone manage your investments.”
This is a theme that Zigmont also emphasized. “Your financial mindset and behaviors tend to have a bigger impact on your financial success than the numbers themselves.”
To know more: 29 Best Games That Pay Real Money in 2024
You don’t need a seven-figure net worth to get expert help. You only need a few hundred dollars to pay for a few hours of an expert.
This article originally appeared on GOBankingRates. with: I’m a Financial Advisor: Here’s My Client’s Average Net Worth