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  • Writer's pictureGrant Allen

3 Boxes to Check Before Hiring a Financial Advisor

Whenever I write a blog for our site at Lyv Financial or submit an article to a publication in hopes of being chosen as a feature article, I like to do some research on what I’m talking about for a few different reasons:

1. I think it’s the most responsible way to write or discuss anything that may have different viewpoints.

2. I want to always be as non-biased as I can possibly be, regardless of how I feel about the topic.

3. I usually learn something new—even if it’s something seemingly small and unimportant, learning something new is always fun.

It’s no surprise that only 17% of Americans use a financial advisor or money manager to help them build wealth, according to a study done by CNBC in 2020. After all, the internet, social media, and iPhone’s have largely been contributed to individuals self-managing their money.

That being said, if you’re interested in a “whole market” approach such as an ETF or Roth or a Whole Life Insurance policy to stockpile your money, you’ll need to hire someone—there’s no way around it. Sure, you can day trade and invest in real estate by yourself, but in general, a money manager, financial coach, or financial advisor needs to step in at some point… maybe.

Here’s a few boxes to check off before you consider paying someone to manage your hard-earned money.

1. Do you have investable assets that would benefit from having a financial advisor or money manager?

The common misconception with building wealth is that you need someone holding your hand the entire way or that you need to hire someone to manage your money in the early stages. In reality, what you really need is to build the habits of wealthy people. If you can adopt the habits wealthy people have, you’ll quickly get to the point where you have enough investable assets to then hire a professional, if you feel like you need their help.

Adopting sound, fundamental habits such as controlling your spending, eliminating bad debt, paying yourself first, living below your means, etc.—these habits will get you to the point where you can feel comfortable hiring an advisor or manager, because you’ve laid the foundation of how you spend your money.

If you’re looking for a “number” as to when you are at a place in which you should hire a money manager or financial advisor, the common range of investable assets is anywhere from $25,000 to $30,000. Be careful though, if you aren’t in a place where you can “lose” this money, consider a different avenue of investing or continue to store money until you feel that you have the proper amount of cushion. An example being, $25,000-$30,000 + 3-6 months of income stored.

2. Would your efforts be better focused towards increasing cash flow?

In working with thousands of clients, there is one common denominator when it comes to virtually every family, business, or individual’s finances—cash flow could always be increased. Whether it be freeing up the $500 that you’re currently putting towards your car, temporarily stopping contributions to your employee sponsored plan, or cleaning up your budget, increasing your cash flow comes in many different forms.

Sure, you could increase your income and that would certainly increase your cash flow. However, when we consult with our clients, it’s not our place to encourage someone to take on another job or side hustle just so they can increase their cash flow.

Like beating a dead horse, it really does come back to the basics: controlling your spending, protecting your family, stockpiling money that is ultimately liquid, educating yourself on where to invest, rinse and repeat. In almost all cases, it’s the lifestyle changes and habits that people create that will drastically enhance their financial situation, not an investment account with an advisor.

Keep in mind, a modest 7% return on a $50,000 investment is still only $3,500—and in most cases, that $3,500 gain is locked up in accounts advisors put you in (in most cases), so it doesn’t necessarily help you until 59 ½ anyway. In reality, this doesn’t increase your working cash flow—this only increases your assets column.

3. Is there total transparency with the advisor?

This is oftentimes a gray area. I bring it up as a talking point because in most cases, people aren’t aware of how their advisor gets paid. Moreover, the common question is “what exactly am I paying you and how much is it effecting my investments?”

Well, the answer is a little muddy, which is why a lot of people are reluctant to hire one. You have fee-based, fee-only, commission-based, percentage-of-assets-based, and so on and so forth. This is your money—there should be an absolute focus on total transparency and understanding of how the advisor is paid and what they are offering.

Partnerships and/or affiliates that the advisor has should also be considered. As you grow your wealth, you’ll have to consider the tax implications of the accounts your vested in as well as estate planning and insurance just to name a few. If the advisor can’t offer you these areas of expertise, the next best thing is that they know a qualified professional in areas of expertise that can help you.

In summary, hiring a financial professional should be carefully considered. All in all, what will create wealth will be the habits you form and systems for your money you adhere to. For a free guide on how to do that, check out The Order of Wealth at



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