When to Get a Financial Second Opinion
By Rebecca Lake, CEPF®,2023-02-01
Working with a financial advisor can help you to gain clarity about your financial goals and what steps you should be taking to reach them. It's possible, however, that you might have doubts about the advice you're receiving. In that case, you might consider getting a financial advisor second opinion. Doing so could give you peace of mind but it's important to know what you might pay for supplemental advice.
Need a second opinion on retirement or another financial topic? We can help you find a financial advisor.What Is a Financial Second Opinion?
Getting a financial second opinion simply means having another advisor review your financial plan . It's a little like getting a second opinion from a doctor following a medical diagnosis or getting another auto repair shop to take a look at your car if you're not satisfied with what your regular mechanic is telling you.
Financial second opinions are just that – opinions. They're not a set-in-stone plan for any action you need to take with regard to your financial situation. It's up to you to decide whether to follow the advice a second advisor offers or stick with the advice you received from your current advisor.
You don't necessarily need to work with an advisor to get a financial second opinion either. If you've been managing your finances solo up to this point or relying on advice from friends and family, meeting with a financial advisor can be a great opportunity to figure out what you're doing right (or wrong) and how to shape your financial plan going forward.When Should You Consider Getting a Financial Advisor Second Opinion?
Whether it makes sense for you to get a second opinion from a financial advisor can depend on your situation. That includes whether you're working with an advisor currently and what your main concerns or questions are regarding your financial plan.
If you're working with an advisor, you might consider a financial second opinion if:
- Your advisor is not responsive to questions you have about your financial plan
- Efforts to communicate with your advisor are met with radio silence
- You question whether the advice you're receiving is appropriate for your goals and needs
- You're interested in exploring other services, beyond what your current advisor offers
- You're dissatisfied with the direction your portfolio is moving in or the quality of investments your advisor recommends
If you're managing your portfolio yourself, a financial second opinion could make sense if:
- You've reviewed your investments and the overall performance falls short of your goals
- You've accumulated assets to the point where managing them is taking up more of your time and energy than you'd like
- It's not clear to you whether you're taking too much risk or not enough to achieve your objectives
- Life changes, such as a marriage, the birth of a child or divorce have you rethinking your financial plan
- You need help with planning for big goals like retirement or college
You might also seek a financial advisor second opinion if you're on the receiving end of a substantial amount of wealth. If you've inherited millions of dollars from a relative or won the lottery, for instance, then it might be helpful to have multiple sets of eyes review your financial plan.Benefits of Getting a Financial Second Opinion
You might be familiar with the old adage about too many cooks spoiling the soup. And that's true – too much of anything, including financial advice, can cloud the issue at hand.
However, there are some benefits to asking for a second expert opinion when it comes to managing your finances. Having a second opinion can help you to:
- Determine whether your financial goals are valid and realistic for your situation
- Identify potential areas for improvement or adjustment within your financial plan
- Better understand your current portfolio allocation and what your ideal asset allocation should be
- Reduce fees, if a second advisor determines that you're paying too much for certain services or investments
- Gauge your true risk tolerance and risk capacity
A second opinion can also help you settle any internal debates you might be having with yourself about staying with your current advisor versus moving on.Is It Better to Have One Financial Advisor or Two?
In most cases, having just one financial advisor is sufficient. A financial advisor can offer comprehensive advice on everything from budgeting to retirement planning .
You may, however, need more than one advisor if you have a complex financial situation or a lot of assets to manage. For example, you might work with one advisor to cover the basics – spending, investing, saving, etc. – and another who specializes in legacy planning. You may find that multiple advisors who specialize in different areas provide greater value than a single advisor who does a little of everything.
What's important to remember is that working with more than one financial advisor can mean paying more in fees. A typical advisor fee is around 1% per year but not every advisor structures their fees the same way. So it's helpful to consider the costs you might pay in exchange for the value multiple advisors can provide.
Also, keep in mind that the advice you receive from multiple advisors may not always align. You'll need to decide for yourself what advice to follow when applying it to different areas of your financial plan.How to Get a Financial Advisor Second Opinion
If you'd like to talk to an advisor to get a financial second opinion, there are a few ways to find one. You could start by asking friends, family or coworkers for recommendations. If that turns up nothing, you can search for advisors online.
Many advisors and wealth management firms offer second-opinion consultation services. You can schedule a meeting and get a review of your financial plan, with no obligation to work with the advisor afterward. Whether you pay for that consultation or not can depend on the advisor.
If you're getting a financial second opinion, it's important to make the best use of your time. Here are a few tips for meeting with a second financial advisor.
Know why you're going. If you walk into an advisor's office for a second opinion without knowing why you're there, you're just going to waste everyone's time. Reviewing your situation, including your biggest concerns and questions, beforehand can help you decide what to focus on.
Make a list. Listing out questions you want to ask an advisor can help you stay on task. Your consultation might be limited to 30 minutes or an hour, so having a list to follow can ensure that you're addressing the most pressing issues without veering off track.
Consider a follow-up. If you didn't get all of your questions answered in the initial meeting or you think up new ones afterward, consider booking a second meeting with the advisor. You can take a deeper dive into the issues introduced in the first consultation and get a better understanding of what the advisor has to offer.
Trust your instincts. If you're meeting with an advisor for a second opinion because you're thinking of leaving your current advisor, listen to your gut. If the advisor, or their advice, doesn't pass your vibe check that's a sign that you may need to look elsewhere for help.The Bottom Line
Getting a financial advisor's second opinion may be necessary if you're at a crossroads in your financial plan or you're simply looking for reassurance about the direction you're taking. Taking time to research advisors and ask for recommendations from friends and family can help you to find the right professional to consult with.Financial Planning Tips
- Consider talking to your financial advisor about how to best assess your goals and needs. If you don't have a financial advisor yet, finding one doesn't have to be complicated. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
- If you're considering moving to a new financial advisor, take time to familiarize yourself with their fee structure. Fee-only advisors , for instance, only make money from on the fees they charge their clients. A fee-based advisor , on the other hand, may earn money through fees as well as commissions on the products they sell. It's also important to know whether the advisor is a fiduciary , which means they're required to act in their client's best interests at all times.
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