There’s no question you need money to make a financial adviser worthwhile: You wouldn’t hire a landscaper if you didn’t have a yard, or lease dock space without a boat.
But the idea that you need a lot of money to seek out — and benefit from — financial advice is largely a misconception, says Shannon Pike, president of the Financial Planning Association.
“Financial planning is for everyone,” says Pike. “If you don’t do the blocking and tackling early on in your finances — and that might even be with your first paycheck or first job — you run the risk of setting up bad financial habits, which are going to be hard to correct later down the road.”
Yet many financial advisers charge their fees as a percentage of assets under management. The more you have, the more they earn. Because of that, some won’t take on a client with less than $250,000 or so; those who do may charge more at lower balance levels.
Still, there are plenty of ways even small-dollar investors can access financial advice. Here are three places to look.
Your employee benefits
Professional services firm Aon Hewitt called financial wellness programs the “top initiative for employers” in 2017. Offerings in this realm include financial planning, budgeting and debt management assistance, and stock market and investing basics.
The programs are typically free and may be run by a registered investment adviser or certified financial planner. Ask your human resources department what’s available at your employer.
A game changer to the financial advice market, robo-advisers are automated investment management companies. In plain English, they manage your investments mostly via computer algorithms, which drives down costs compared to human investment managers.
That means they often accept small accounts and charge very low fees. Most robo-advisers cost 0.25% to 0.50% of your assets under management per year. (Financial advisers who charge a percentage of assets often set their fee around 1%.) Some robo-advisers also offer access to human financial advisers, though there may be an additional fee.
A fee-only financial planner
Finally, not all financial advisers judge you by the size of your account balance.
If your situation is fairly straightforward and you just need a gut check or portfolio tweak, you might want a planner who charges by the hour. You’ll get the advice you need without paying ongoing portfolio management fees. You can find an hourly adviser through the Garrett Planning Network.
Pike says that many new advisers are also launching subscription models, under which you pay a monthly or quarterly fee for ongoing advice. Ask financial advisers in your area if they operate under this model, or do a search through the XY Planning Network, an adviser group that specializes in Generation X and Generation Y clients.