Robert A. Di Ieso, Jr.
By Martha C. White
December 29, 2016

Q: How do I know when I need a financial advisor? I can choose between target-date funds and index funds that just track the market, and there are robo-advisors out there if I want more specialized input. When is it worth the time and money to seek out (and pay for) advice from a human?

A: There’s no single hard-and-fast guideline, but financial planners say the kinds of investments you have and how much they’re worth are a good place to start.

“If I had to draw a line, if a portfolio is $2 million or more in assets, consulting with an advisor would be financially prudent,” said Micah Porter, president and CEO of Minerva Planning Group in Decatur, Ga.

In addition to the dollar amount, another important factor to consider is the complexity of your holdings. “When you have multiple accounts—401(k)s , after-tax accounts, college savings—and if you are married and your spouse has these as well, it may serve you to use a financial advisor to coordinate a global strategy for all of your investments,” said Joseph Heider, president of Cirrus Wealth Management in Cleveland.

A planner can make sure there aren’t areas of overlap between your investments and that they all complement each other, Heider said. He or she will also be able to give you a better picture of what your tax implications and liabilities will be for various types of accounts or holdings, both now and in the future, when shifts in income could bump you into a higher or lower tax bracket. As your nest egg grows over time, a financial planner can field questions about asset protection and estate planning.

If you inherit a portfolio, a planner can get those assets to dovetail with your own financial goals and sort out any issues with capital gains. “The advisor can also help transition a portfolio of individual stocks and bonds to a lower-maintenance one that uses mutual funds and ETFs,” Porter said. That will give you the option of going back to handling your investments on your own once they’ve been made more manageable.

Finally, having your accounts in the hands of a professional can keep you from acting on gut-level impulses that could lose you money. “Our natural tendencies as humans are to react to the most immediate past experience,” Heider said. In other words, we panic and throw the old buy low, sell high axiom out the window. “If left to our own devices, we tend to do the opposite,” he said. An advisor who’s used to navigating the market’s ups and downs can prevent clients from “doing the wrong thing at the wrong time.”

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