This Smart Money Move Can Save Investors 100 Hours a Year

A new study shows that working with a financial advisor can be good for your calendar as well as your wallet.

People who hire financial pros to help them manage their money save a median of 100 hours annually by outsourcing some or all of their complex financial tasks, according to a Vanguard survey of more than 12,000 people, including more than 7,700 clients of the investment giant.

Roughly 3 in 4 of the Vanguard customers surveyed said they saved a median of two hours a week — or more than 100 hours annually — on their finances. Researchers note that people getting help with their money also had lower stress, while people who reported more stress about their money spent the most time on these tasks.

While it’s worth keeping in mind that these findings come from a company that makes money selling financial advice, other research also finds that professional money advice tends to be worth the investment.

Study results released this year by the CFP Board, the organization behind the certified financial planner designation, found that 78% of people who worked with CFPs had emergency funds containing at least three months’ worth of expenses, compared to 53% of those who managed their money by themselves. In addition, just 8% of people who worked with CFPs reported money anxiety compared to 18% of those who handled all their financial affairs themselves.

Financial advisors aren’t exactly the same as financial planners; the former generally provide advice focused on investing.

They might manage your portfolio directly or offer guidance, such as how to make sure your investments align with your financial goals and risk tolerance. They can recommend when and what investments to buy and sell or carry out those transactions on your behalf, as well as keep you up to speed on your portfolio’s performance.

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Should you hire a financial advisor?

You might not need to pay for a financial advisor on your own.

If you have a 401(k) or similar defined-contribution retirement plan at work, your employer’s plan may include one or more consultations with a financial advisor as a perk. You can also seek out a financial advisor on your own, but if you do so, it’s smarter to stick with those who are fee-only. This designation means they don’t earn commissions from selling products like insurance policies or annuities that might benefit them more than you.

You probably don’t need to make a huge or expensive commitment, either. A growing number of advisors charge by the hour and don’t require you to sign with them for the long haul.

A 2023 survey of financial advisors by Kitces, a resource and research platform for financial professionals, found that while only a tiny percentage of advisors make most of their money from hourly work, about 40% of them do at least some business on an hourly basis. “A sizable minority share of advisors are engaged in ongoing advice processes [and] delivering advice incrementally,” rather than putting together a single, all-encompassing plan, the report found. At the median, the hourly rate charged by advisors was $250.

It’s common for people to seek professional financial advice when they start to think about retirement, or when they hit a major life milestone, like getting married or buying a home, says Elizabeth Pennington, a senior associate at the financial planning firm Fearless Finance.

“Often, people will come in and say, ‘I don’t want to learn how to pick investments. It’s too complicated,’” she says.

Many of her clients would prefer to leave the nitty-gritty in the hands of a pro rather than muddle through the process themselves. In many cases, “They just need to have someone help them figure out what they can safely ignore,” she adds. “There’s a lot of information on the internet, but a lot of it is also not right.”

Another benefit of getting financial assistance from a pro is that when markets are in turmoil, as they were this spring, an advisor serves as a buffer.

“A professional [can help] zoom out away from the emotion,” Pennington says.

The Vanguard survey found that working with an advisor yields emotional dividends, as well. People who worked with an advisor were half as likely to report high levels of financial stress. While about a third of do-it-yourself investors reported low levels of financial stress, that percentage rose to fully half among respondents who worked with a pro.

Vanguard also found that 86% of the survey respondents getting financial advice said they had greater peace of mind.

Interestingly, this only held true for people getting advice on a person-to-person basis from a human advisor. People who used digital financial advice tools reported feeling less at ease not only than those who got help from a human, but than those who got no financial management assistance at all.

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