How to Know When It’s Time to Hire a Financial Advisor

Happy middle aged couple meeting with financial advisor

Please note the publish date of this blog. Financial information, market conditions, and other data mentioned in this post may no longer be accurate or relevant.

Working with a financial advisor could be the next step in growing your wealth, but knowing when you’re ready for that step can be challenging to determine.

So, when is the best time to start? 

As financial advisors, this is one of the most common questions we hear, and it’s an excellent one!

Starting out, you may be able to get by for a while on your own. But several signs begin to appear when you could greatly benefit from professional guidance. 

Let’s explore a few situations when hiring a financial advisor is advantageous. 

You Suddenly Gain Significant Wealth

Finally win the lottery? 

Probably not, but there are plenty of ways people unexpectedly come into major wealth — an inheritance being one of the most common. 

Perhaps your parent, grandparent, or spouse left you far more money than anticipated. 

At first, you may feel overwhelmed given that inheritances often mark the passing of a loved one. It’s usually best to avoid rash decisions while processing grief. Once you fully understand how much money you have, you may wonder about the best way to use this newfound wealth. 

Unfortunately, people have a history of squandering their inheritances, especially when sizable. reports that nearly 70% of wealthy families lose their fortune by the second generation.

You can avoid being a statistic by hiring a financial advisor. 

Your financial advisor can help you understand exactly what you’ve inherited (an investment account, retirement account, real estate, equity, collectibles, etc.) and how to use these resources in the most beneficial and tax-efficient way. 

There are several practical (and responsible) ways to make the most of your inheritance, such as:

  • Help pay off high-interest debt
  • Maximize your retirement savings
  • Boost your brokerage account
  • Bulk up your short-term savings goals (emergency money, vacation fund, etc.)
  • Bolster and diversify your investment portfolio

It’s important to note that while you may not be required to pay taxes on your inheritance (unless you live in one of the 17 states with estate or inheritance taxes), taxes may be owed depending on what you do with the money. 

For example, if your inheritance includes a traditional IRA, cashing out that account would likely be a taxable event. If you don’t have an immediate need for the money, your financial advisor may recommend leaving it in the account to grow.

Other scenarios that can lead to sudden, significant wealth include your company going public, selling your house, winning a settlement, or any other major liquidity event.

Receiving such a large sum at once could elevate you into a higher tax bracket. In these cases, receiving savvy, tax-advantaged investment strategies from a knowledgeable financial advisor is invaluable. 

While such a large sum may overwhelm and/or excite you, an advisor can help you apply a reasoned and comprehensive strategy while removing any guesswork. 

Expand what's possible with money.

Speak with a Financial Advisor today.

Your Financial Life is Getting “Complicated”

Just like a relationship status on a social media app can be labeled “it’s complicated”, you can also find yourself assigning that same label to your relationship with money. When that happens, it may be time to bring in a professional. 

What kind of complexity are we talking about? 

You may have many scattered accounts such as 401(k)s, bank accounts, investments, and credit cards. Getting help to consolidate and streamline your finances can make them feel less overwhelming and easier to control. 

Complexity may also mean you are moving up at your company and now have considerable equity to understand. Equity and stock options can be extremely complex from a tax perspective. 

There are two main categories of Employee Stock Options (ESOs):

  • Incentive Stock Options (ISOs) – These are usually only awarded to upper management and are tax-advantaged (i.e. treated as capital gains instead of income)
  • Non-qualified Stock Options (NSOs) – These are granted to employees at all levels but are unfortunately treated as income tax

Keep in mind that this is just an overview. Stock options come with intricate tax responsibilities and rules to follow. 

Suppose you receive NSOs that threaten to raise your tax rate. In that case, your financial advisor may recommend a plan to avoid this, such as putting money into a tax-free charitable giving account known as a donor-advised fund (DAF)

You may also experience different financial or lifestyle complexities as you age, such as balancing finances when trying to support adult children, aging parents, and yourself. 

When these phases of life occur, financial advisors can help you explore practical and achievable ways to:

  • Create a realistic cash flow plan
  • Balance your finances and pay off any outstanding debts
  • Manage your aging parent’s finances
  • Open a tax-advantaged college savings fund
  • Plan for your retirement 
  • Create a comprehensive estate plan

These are just some of the steps a financial advisor can do to help simplify your complicated financial life. 

Abacus advisors also understand that finances are closely tied to your closest and most meaningful relationships. If you’re getting married and want to know how to transition from managing money as an individual to a couple, we can help. 

You and your spouse may view money differently, which can cause conflict in your marriage. Your financial advisor can act as an intermediary to help you find a collaborative path forward that honors each of your values.

When you use your wealth correctly, it can help you achieve your goals. But having a comprehensive financial plan may feel foreign at first, so having a trusted advisor to guide you can provide peace of mind.

Focus on what matters most.

Simplify your life with a financial plan so you can enjoy every moment.

You’re Going Through a Significant Life Transition

Life has a way of making you comfortable — and then it changes. 

Having a financial advisor can help you successfully navigate changes with your money, often empowering you with confidence and a sense of well-being. 

One of the biggest financial (and life) transitions is retirement. Everything changes: from how you get paid to the way you pay taxes to how you live your life. 

Frighteningly, the U.S. Census Bureau reports that 49% of those ages 55 to 66 have no retirement savings, showing just how unprepared many are for this critical transition. 

That said, an advisor can make the process more understandable and transparent, especially if you are nearing retirement age and feel you are scrambling to prepare. 

Some key questions your advisor can help you address include:

  • How will your financial needs change in retirement? 
  • How much money should you save to meet your retirement needs?
  • What is the best healthcare coverage option for you? 
  • When should you start taking Social Security distributions? 
  • How can your finances empower your retirement dreams?
  • Do you have an updated estate plan?

Retirement can be one of the most exciting yet intimidating life transitions. Abacus financial advisors are well-versed in retirement strategies and can help you create a plan that gives you a sense of security and confidence as you enter your golden years. 

Another significant life change is divorce. When you separate from a partner, there are many questions to be answered about your finances. You must protect your assets, start building financial independence, and plan for a different and separate future. 

You may also experience the death of a partner. Working with a financial advisor through this passage of life, one who can help guide you with your money concerns, can often make the burden of grief a little easier to process.

Transitions in life can be jarring, but a financial professional can help ease pressure so you navigate your life changes more smoothly and be more informed. 

You Have a Lot of Cash You Don’t Know What to Do With

You might think there’s no such thing as having “too much” cash, but it’s not necessarily true. 

Cash is a wonderful tool to protect your wealth and help you accomplish short-term goals. There are many reasons to have a significant amount on hand, including using cash for:

  • An emergency fund
  • Down payment for a house
  • Family vacation
  • Important life events 
  • Medical expenses
  • A new car

However, if most of your wealth is in cash, your money likely isn’t growing enough to maximize your future. As one example, even though savings rates are increasing, those rates are still not enough to keep pace with inflation, especially long-term. 

This is why investing is the next logical step. Your advisor can help you set up an investment strategy that looks at your risk tolerance, risk capacity, allocations, taxes, time horizon, and how your values inform your goals. 

Say, for example, you are in your 40s and still have several decades before retirement. Your financial advisor may recommend maxing out Roth IRA contributions or investing money in a highly diversified, less volatile stock option like an ETF or mutual fund. 

If you’re on the brink of retirement, they may recommend a dividend stock since those offer a regular cash payout which can contribute to retirement income.

Whatever the case, most experts recommend you invest 15%-25% of your post-tax income. 

Your financial advisor can help you create a well-balanced portfolio that allows your money to be maximized instead of earning peanuts in a savings account. 

Your Wealth is Nearing $1,000,000

First, congratulations! This is a huge accomplishment and you’ve put in the work.

That said, more money tends to breed more complexity. If you want to enjoy your wealth rather than spend time figuring out the complexities of the financial system, an ongoing relationship with a financial advisor can help you effectively manage your wealth.

When dealing with large amounts of money, advisors can offer strategies to:

  • Mitigate your tax liability
  • Establish a charitable giving strategy
  • Manage and consolidate investments
  • Create a thorough estate plan

Whatever your needs, an Abacus advisor will not only help create a clear path to manage your wealth, but they will do so in ways that align with your personal core values. 

Not Quite Ready to Hire an Advisor? You Can Still Be Proactive

Even if you don’t feel like you need professional advice right now, there are still productive ways to be a good steward with your money. 

Perhaps it’s too anxiety-provoking or you dislike financial jargon and just want to find out a few of the basics. 

Abacus has created a free Beginner Finance Workshop that offers simple, straightforward ways to better manage your money. 

Organize your personal finances.

Take our free 6-week course, Beginner Finance, and finally get on track for success.

Of course, if you’ve come into a lot of wealth or are facing a significant life transition, it may be the perfect time to start your journey with one of our trusted financial advisors. Our mission is to help you expand what’s possible with money, and align your money with your values so you can spend your life doing what matters to you most.

Schedule a free consultation today to explore how we can help you take the next step in your financial journey.


What’s your financial archetype?

Simplify your life with a plan

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.