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Financial planning is an important part of life, irrespective of one’s age or economic status. It necessitates making educated decisions about your finances to effectively pursue your life ambitions. For many, this process might seem quite difficult to figure out. This is where the role of financial advisors can become significant. They offer advice and guidance on assorted financial issues, including budgeting, investing, retirement planning, tax planning and insurance. Financial advisors provide a comprehensive perspective of your financial situation and assist you in making informed decisions to attain your financial objectives.
While not often considered by young adults, financial planning’s importance for those in their 20s can’t be overstated. This phase usually brings a set of financial hurdles like dealing with student loan debt, landing a first job or planning for significant life milestones such as buying a home or starting a family. A financial advisor can help maneuver through these challenges, establishing a robust financial base for your life.
What a Financial Advisor Can Help You With
It may be hard to justify the cost of a financial advisor in your 20s, especially if you don’t think you have enough assets accumulated yet. However, if you have a decent amount of money, then it could be well worth the cost. Here are five specific things a financial advisor can help you with.
1. Creating a Long-Term Financial Plan
One mistake a lot of people make in their 20s is not having a long-term financial plan and not knowing what they are saving or investing for. It can take executing a financial plan for decades before you have enough money to retire. More and more young people are wanting to retire early, but it’s nearly impossible to do if you don’t plan for it well in advance.
Talk to a financial advisor to figure out a plan to reach your goals.
2. Helping You Invest
You may know that you need to start investing, especially to accumulate enough money to save for the retirement you want. An expert can help match your goals, appetite for risk and make sure your portfolio is properly diversified. Plus, there are likely many assets that could help you achieve your goals that you may not be familiar with. Advisors can help you understand each and help you invest in the most appropriate ones.
3. Launching Your Retirement Saving
The earlier you can start saving for retirement, the more options you’ll have to retire early and the more money you’ll have to enjoy your golden years. The benefit of compound interest is that your account can continually grow over time. The more time you have, the more it can potentially grow. Getting retirement savings started in your 20s can make a huge difference in your future.
A financial advisor can help you make early small decisions that add up big time.
4. Helping You Create Strong Financial Habits
One of the biggest issues people have in reaching their long-term financial goals is creating the right financial habits when they are young. It’s okay to need help to find the right balance of financial habits that will help you reach the financial future you want. Strong habits can be the difference in hitting the milestones that are necessary for you to reach your long-term goals. You can have more money to pay off debt, buy a home or even retire when you want to.
5. Help You Eliminate Debt
Many people in their 20s are grappling with substantial debt, particularly student loans and credit card loans. The Federal Reserve reports that the average American has $32,000+ in student debt and $7,279 in credit card debt. These figures often lead to financial strain and the habits that create these debts are crafted while you’re in your 20s.
While financial advisors aren’t the only solution for eliminating debt, their expertise can make certain strategies more accessible. They can formulate strategies for managing this debt, assist in creating a budget, comprehend interest rates and prioritize payments.
Financial advisors can advise clients on the quickest and most effective ways to eliminate debt.
How to Find an Affordable Financial Advisor in Your 20s
The case for working with a financial advisor in your 20s is straightforward, but the cost concern is real. Traditional asset-based advisory fees are not the only option, and several alternatives are specifically suited to younger clients who are still building wealth.
Fee-only advisors who charge by the hour or by project are often the most accessible entry point for someone in their 20s. Rather than paying an annual percentage of assets under management, you pay for a specific deliverable, such as a one-time financial plan, a student loan repayment strategy or a retirement savings review. Hourly rates typically range from $150 to $400, which means a focused session can address your most pressing questions without a long-term commitment or a minimum asset requirement.
Subscription-based financial planning services have grown significantly in recent years and tend to cater specifically to younger clients. These services charge a flat monthly or annual fee, often between $50 and $300 per month, in exchange for ongoing access to a financial planner who can answer questions, review your plan periodically and adjust recommendations as your situation changes. The flat fee structure removes the barrier of needing a large portfolio to justify the cost.
For the investment management piece specifically, lower-cost automated platforms can serve as a starting point. These services typically charge between 0.25% and 0.50% of assets annually and handle portfolio construction and rebalancing based on your goals and risk tolerance. While they do not replace personalized guidance from a human planner, they can manage the investment side of your finances at a fraction of the cost while you build toward working with a full-service advisor.
Some employers offer access to financial counseling or planning services as part of their benefits package, sometimes at no additional cost. Checking with your HR department before paying out of pocket is worth doing, since these programs are frequently underused and can provide meaningful guidance on budgeting, debt repayment and retirement contributions.
The National Association of Personal Financial Advisors maintains a directory of fee-only advisors at napfa.org, and the XY Planning Network at xyplanningnetwork.com lists advisors who work specifically with younger clients and offer fee structures designed for those without significant accumulated assets.
Bottom Line
Getting objective financial guidance early in your planning journey can help you build a stronger foundation and reduce costly mistakes later. Your specific financial needs, goals and resources should guide the selection of an advisor who truly fits your situation. Different advisors offer varying specializations and fee structures, so exploring your options ensures you find someone aligned with your objectives. The right advisor partnership depends on matching their expertise with your goals and the value you place on professional guidance.
“Getting objective guidance early can help you build a stronger foundation and reduce the likelihood of mistakes that become more expensive to fix later,” said Brandon Renfro, CFP®.
Brandon Renfro, CFP®, RICP, EA provided the quote used in this article. Please note that Brandon is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.
Tips for Financial Planning
- It’s important to create a financial plan as early as possible. One way to do that is to find a financial advisor who can provide expertise and oversight to help you reach your short- and long-term financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You can also get insight into what your portfolio might look like with certain investments by using SmartAsset’s free investment calculator.
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