Do I need a financial advisor? It's a question many investors struggle to answer without truly understanding the potential value that comes with professional help, or the potential risk of going it alone.

What Value Looks Like to the Novice Investor

Generally, inexperienced investors should work with financial advisors. The internet makes it easier for even a novice to avoid the fees associated with financial professionals by investing on their own. There is, however, value in the service.

A seasoned financial advisor can open a beginner's eyes to new ideas and expose new investors to different opportunities for saving and growing their money. For example, a good advisor might recommend maximizing contributions to a Roth IRA, an amazing tax-free vehicle that the novice may not understand or even know exists.

What Value Looks Like to the Experienced Investor

For more experienced investors, advisors can provide value by offering them things they can't get on their own. An advisor may be aware of companies that even savvy clients have probably never heard of, but that are growing quickly and have potential as strong investments.

An advisor may have an entire spreadsheet filled with companies that have grown from $100 million to $500 million or a billion over just a few years. Some advisors are paid to identify and track the fastest-growing companies — they add value by sharing this information with their clients.

Advisors can also provide value to more experienced investors by exposing them to alternative investments like private equity, real estate, and hedge funds, for the qualified who have between $5 million and $30 million. Some of these offerings are also right sized for the average investor. Investors often will never find these on their own.

Most people can easily find Kiplinger's reports on the top mutual funds, set up low-cost brokerage accounts and choose their own investments. They don’t always have the time or desire. Professional financial advice becomes worth the cost when the advisor adds value beyond what is available in the DIY approach. For investors of all experience levels, value is the ability to seize opportunities that would not have otherwise been available or even known without professional help.

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