Hiring a financial advisor to help you with an inheritance

4 min read

How to know if you need a financial advisor or planner

  • Financial advisors and planners have strategy and investment expertise to help you make the most of an inheritance or life insurance payments.

  • They can do everything from creating a financial plan that you carry out to offering ongoing management of your portfolio and financial advice.

  • You can find a financial professional to advise you no matter how much you inherited, but some advisors require that you have a minimum of $100,000.

  • Payment structure varies, with some charging a flat fee for the financial plan, or a flat annual fee.

  • Some advisors charge an annual fee that is equal to a percentage of your holdings, called “assets under management” or AUM.

When a loved one passes away and leaves you with an inheritance, it can be an overwhelming experience. While you may feel grateful for the gift you’ve received, you likely also feel a responsibility to do the most with your loved one’s generosity.

Whether you inherit a lump sum—or are the beneficiary of a life insurance policy that may pay out in a number of ways—any people in this position consider hiring a financial planner or financial advisor to help them make informed decisions with their inheritance.

Enlisting the help of a professional may not be the right move for everyone. It depends on your financial situation, the amount you inherited, and your goals. Before making the decision, here are a few things to consider. 

What’s the difference between a financial planner and advisor?

Financial planners are professionals that help you create a long-term strategy for your financial life, while financial advisor typically also includes other areas of expertise like brokers, bankers, and money managers.

Keep in mind that the terms advisor and planner are often used interchangeably, and people who call themselves “planners” and “advisors” may do the same thing. In terms of regulation and certification, there is no regulation of financial planners, so make sure to ask about their background and specific experience before hiring.

What can they do for you?

Financial advisors are experienced professionals who help individuals, families, or corporations create a plan to meet their long-term financial goals.

Depending on your needs, they can offer general guidance or advice tailored to a specific area, for example, estate planning, retirement, or investments.

If you hire a financial advisor to manage your investment portfolio, they should be using their expertise to make smart choices for you to grow your assets. In sum, financial advisors offer a range of services depending on your priorities.

How much money do you need to have to work with an advisor? 

Many financial advisors have minimum asset thresholds, which typically start at $100,000. Another common benchmark is $250,000, though some advisors require $1 million or more.

Depending on your needs, they can offer general guidance or advice tailored to a specific area, for example, estate planning, retirement, or investments.

However, anyone can request financial advice from a professional, no matter how much cash you have in your accounts. It’s a matter of connecting with advisors who work with people with similar net worth.

How much will it cost?

Each financial advisor will have their own method for calculating their fee structure for their clients.

Some charge a single flat fee for creating a financial plan, which you are responsible for carrying out. A stand-alone plan like this typically costs $1,000 to $3,000.

Some charge a flat annual fee (usually ranging between $2,000 and $7,500 per year) for the plan plus ongoing management and oversight of your investments. And others calculate their annual payment as a percentage of your account balance, a fee structure called “assets under management” or AUM. AUM advisors typically charge 0.25% to 1% per year.

Some people charge by the hour, usually somewhere between $200 and $400. So, the pricing depends on your arrangement, and how much money you are investing. 

Is it worth it? 

If you have a received a significant inheritance and you’re feeling uncertain about how to manage it, a financial advisor may be worth the money.

Not only will the expertise of a financial advisor give you peace of mind, but the expert guidance they can provide will help you grow your wealth.

However, you don’t need to lock yourself into a full-time relationship with an advisor if you’re not sure it’s right for you. You can request a one-time meeting or consultation to get some advice, or you can hire a financial planner to help you craft a financial plan, instead of hiring someone to manage your finances full-time.

You have options, but whatever you choose, it’s definitely worth it to check in with a professional at this important juncture of inheriting new assets. 

The benefit of having a financial advisor handling your investments is that you can rest easy knowing that you’re building a sustainable, long-term financial plan for yourself and your loved ones—and honoring the generous legacy your loved one left in your hands.

You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.