Eight Times When It's Worth It to Pay for a Financial Guru

One of America's favorite three letter words is DIY. In this age of easily accessible know-how, we can all study up and become experts on any subject, so why pay someone else for their skills when you don't have to?

Sometimes, that is indeed a smart strategy, but in certain financial situations, there's no shame in calling in reinforcements, because there are times when a do-it-yourself strategy can make a bad situation much worse.

"When it comes to investing and money matters, many people don't know what they don't know, and that's why sometimes it's best to seek financial advice," says Beth Lynch, a certified financial planner with Schneider Down Wealth Management Advisors.

Here are eight situations when it's better to pay the premium for good help than to pinch pennies and go it alone.

1. Taking Charge of Your Parents' Lives

Mom and dad took care of you. Now it's your turn. But when it comes to handling your parents' affairs, "You do not want to enter this harbor without a pilot," says John Graves, a principal with The Renaissance Group.

Many people are not aware of what it takes to get a parent in a nursing home or what the legal requirements are to get a parent on Medicaid to help pay for that care, explains Robb Delisanti, a senior partner at Angelo Planning Group and director of investment management accounts. "We have seen people who have a lot of sleepless nights due to the paperwork involved. Get a financial planner to help you decide what to do with assets and an attorney knowledgeable in elder-care issues to help you navigate the legal system, he adds.

Getting that professional help is a matter of fiduciary responsibility, especially if you have siblings. "Too many times, families fight over money, and taking care of someone else's assets is a big responsibility," says Lynch. If for example, you take on more risk than other family members feel is necessary, or invest too conservatively, there could be major disagreements.

"You don't want to be responsible for your parents running out of money," says Lynch, "but on the flip side, you may do so well that there may not be issues. But I don't know too many people that would take that chance."

The biggest lesson in all this may be preemptive: Realize how hard it can be to sort these issues out late in the game, and avoid putting your children in the same predicament. Get a pro to help with your own estate planning and investigate long-term care for yourself before you need it.

2. Launching a Business

Far too often, those considering starting a business are focused solely on the business itself, including the product, the strategy, and the long-term trajectory, as well as the day-to-day operations.

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"While all this is critical, many forget to properly examine the financial impact," says John Diel, a certified financial planner and senior vice president with The Hartford.

With all the unknowns that inevitably accompany creating a business, building short- and long-term financial plans can start it off on the right foot, he says. A financial adviser can help develop initial and long-term financial plans for the owner's household, including retirement and investment advice, appropriate insurance to protect assets, and better management of the costs of doing business. You have a great idea and may be great at execution, but that's not all you need.

"As anyone who's started a business knows, finances are often lean in the beginning and managing them well is operation critical," says Diel. "Choosing not to pursue the advice of an expert is often the difference between success and failure."

3. Preparing to Say 'I Do'

When your wedding is a year off, you'll likely have a to-do list that's a mile long. But not too far from the top of it should be having a heart-to-heart with your intended on the very unromantic topic of money, and three is not a crowd for this discussion. Bringing a financial adviser into the mix will set the right tone, helping you both remember that you are committing not only to each other, but to a healthy financial future.

A good financial planner can help you define your short-, medium- and long-term goals, figure out your money personalities and philosophies, size up debts, and, most important, help you map out what you want to do financially, and how you two will get there.

"Having a plan will help avoid arguments, hassles, wasting thousands of dollars in unnecessary taxes, interest penalties and opportunity costs," says Bill DeShurko, author of The Naked Truth About Your Money.

Many marriage failures can be traced at least in part to money problems -- and also to problems talking about money. By getting fiscal issues out in the open and talking them through early, "You might avoid divorce," says DeShurko The happiest couples I know are on the same page financially."

4. Counting Down to Retirement

When you're less than 10 years away from retiring, you'll need to clarify your vision, and consider some of the decisions you'll make that will impact your income, retirement time frame and more says Lynne Ford, CEO of ING Individual Retirement. You might have gotten away with winging it for this long, but at this stage, you need a good adviser.

"In retirement, there are no do-overs," says DeShurko. "Once you start you either have the income you need for life, or you don't. It's black and white."

An adviser can walk you through a number of important steps, says Dick Van Dyke, founder of Dick Van Dyke Financial:
Benchmarking retirement goals and objectives, creating inflationary models, or determining how you can spend more in the early years for travel and new retirement activities while preparing for increased future health care costs, for example.

In your 20s, you can make a few mistakes and still recover, because you have time on your side. That's just not true later. "Retirement planning mistakes can be substantial and irreversible," says Van Dyke. "Being forced to leave your home or suffering poverty is not pretty. A planner may be the difference between surviving and thriving."

5. Buying Your First Home

The day you close on your first new home is almost certain to present you with the tallest stack of papers covered in legal fine print you've yet encountered. A home is the biggest purchase most people ever make, and it can be complicated and confusing -- certainly no time to fly solo.

"Spending too much on housing that is not realistic based on your income, can set you up to fail in the long run," says Francisca Amador, vice president of business development at Blackhawk Bank.

So before you begin the hunt for that dream home, first stop by a mortgage lender to get a pre-approval letter. The lender will help identify how much you can really afford, and select the mortgage option that's best for you, as well as determine how much you qualify for. "This will allow you to shop with confidence and have additional bargaining power with the seller," she adds.

You should also get good legal counsel -- someone who actually understands all that fine print and is there to look out for your best interests.

6. Losing a Spouse

The death of a husband or wife is tough enough emotionally; trying to figure out what it will mean to your finances can be overwhelming. In a two-income household, the loss of one partner of course means less money coming in, without necessarily much of a decrease in expenses. What happens to the mortgage, the children's college education fund, and the day-to-day expenses are just some of the issues, points out Lynch.

"A [certified financial planner] can help evaluate and analyze scenarios by running projections of future costs, current expenses and money already saved," says Lynch. A CFP can also help you put a plan in place to meet your needs in order of importance, and show you how to meet your financial goals.

7. Drowning in Debt

Debt is truly a four letter word, and the deeper you get, the more you need to put pride aside and get help. A debt counselor can help you with a strategy to eliminate or greatly reduce your debt.

Here are a few cues that you need help: There are frequent arguments in your home about money; credit card balances increase each month; or if most of your credit cards are near their limits, so you're beginning to apply for new lines of credit. And here's a really big hint: If you have no clue how much you owe, you probably owe too much.

Finally, says Amador, if you're having difficulty paying your mortgage, seek guidance from an approved HUD counseling agency for foreclosure prevention -- soon.

8. Ending Your Marriage

Few divorces are amicable. Though you might want to rush through the whole matter simply to put the intense emotions in the past, wrapping up a marriage is no time for snap judgments that affect your finances. So when you get a divorce attorney, get a financial adviser too. There are simply too many ways for you to do lasting damage to your fiscal health if you make mistakes while unraveling your marriage.

For more advice on this matter, check out DailyFinance's special series on the subject published earlier this year.

There are plenty of times when you can accomplish what you need to based on your own skills, or what you can learn through a bit of judicious research. But don't confuse those situations with the ones in which you can't. While it's never wise to just throw up your hands and allow yourself to be blindly led by an adviser, when the stakes are highest, good guidance can mean the difference in your financial and emotional well being.