AskMyFinance

Category: Financial Planning

  • What Is a Fiduciary Financial Advisor (And Why It Matters)?

    A fiduciary is someone who is legally required to act in your best interest — not their own. When it comes to financial advisors, this distinction can mean the difference between advice that helps you and advice that primarily benefits the advisor’s commission check.

    Related: What Is a QDRO?

    Not all financial advisors are fiduciaries. Knowing the difference before you hire one is essential.

    Fiduciary vs. Suitability Standard

    There are two main standards financial professionals are held to:

    • Fiduciary standard: The advisor must recommend what is best for you, period. Conflicts of interest must be disclosed. This is the higher bar.
    • Suitability standard: The advisor only needs to recommend products that are “suitable” for your situation — even if a better option exists and even if the current recommendation earns them a higher commission.

    Registered Investment Advisors (RIAs) are held to the fiduciary standard. Many brokers and insurance agents are held only to suitability.

    How Fiduciary Advisors Are Paid

    Fiduciary advisors are usually fee-only or fee-based:

    • Fee-only: You pay a flat fee, hourly rate, or percentage of assets. They earn nothing from product sales. This is the cleanest model.
    • Fee-based: Charges fees but may also earn commissions. Still often a fiduciary, but has more potential for conflicts.

    Commission-only advisors earn money when you buy products. Even if they are technically fiduciaries in some contexts, the incentive structure creates inherent conflicts.

    How to Find a Fiduciary Advisor

    • Search the NAPFA (National Association of Personal Financial Advisors) directory — all members are fee-only fiduciaries
    • Use the SEC’s Investment Adviser Public Disclosure (IAPD) database to verify registrations
    • Ask directly: “Are you a fiduciary 100% of the time, for all services?”

    Be cautious of vague answers. A fiduciary should be able to confirm in writing that they are always bound by that standard.

    When Do You Need a Financial Advisor?

    Consider hiring one for major life events: inheriting money, getting married, planning for retirement, navigating a divorce, or starting a business. For simpler situations, low-cost robo-advisors or target-date funds may be sufficient.

    Bottom Line

    Always work with a fiduciary financial advisor when getting advice that affects your long-term financial health. The standard they are held to directly affects whose interests they are serving.

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  • Financial Planning for Newlyweds: What to Do First

    Getting married is exciting. Managing money together is not always as straightforward. Most couples enter marriage without a clear plan for how to handle finances jointly — and the resulting miscommunication about money is one of the leading causes of relationship stress. Getting a few foundational decisions right in the early months can set you up for decades of financial partnership.

    Have the Money Talk First

    Before making any joint financial decisions, have an honest conversation about where each of you stands. That means sharing:

    • Income and take-home pay
    • Debt balances — student loans, car loans, credit cards, personal loans
    • Savings and investment account balances
    • Credit scores
    • Spending habits and financial values
    • Short- and long-term financial goals

    This conversation can feel uncomfortable, especially if one partner has significant debt or poor credit. But surprises discovered later cause far more damage to a relationship than a transparent conversation upfront.

    Decide How to Structure Your Accounts

    There is no single right answer for how newlyweds should manage their bank accounts. Common structures include:

    Fully joint accounts. All income goes into shared accounts, and all expenses are paid from them. Works well when both partners have similar earnings and spending habits, or when one partner does not work outside the home.

    Partially joint (“yours, mine, ours”). Each partner maintains a personal checking account for individual spending, and both contribute to a joint account for shared expenses like rent, groceries, and utilities. This preserves some financial independence while covering household needs together.

    Separate accounts with equal contribution. Each partner maintains fully separate accounts but splits shared expenses. More complex to manage and can create friction around unequal incomes.

    Whichever structure you choose, discuss the rules clearly: who pays which bills, how much each contributes to shared expenses, and how individual spending decisions get made.

    Build a Joint Budget

    A shared budget is not about restricting spending — it is about getting on the same page about where your money goes. Start by listing your combined monthly take-home income, then categorize your expenses:

    • Fixed expenses (rent/mortgage, car payments, insurance, subscriptions)
    • Variable necessities (groceries, utilities, gas)
    • Savings contributions (emergency fund, retirement, short-term goals)
    • Discretionary spending (dining out, entertainment, travel)

    Assign a dollar amount or percentage to each category. Review the budget together monthly, especially in the first year when spending patterns are still being established.

    Establish an Emergency Fund Together

    Before investing or aggressively paying down debt, build a joint emergency fund covering three to six months of combined household expenses. Keep this in a high-yield savings account — accessible but separate from your day-to-day spending money.

    A joint emergency fund protects both partners from unexpected expenses — a job loss, medical bill, or major car repair — without forcing either partner to take on debt or drain their personal savings.

    Tackle Debt Strategically

    If one or both partners bring debt into the marriage, discuss a repayment strategy. In most states, debt incurred before marriage remains the individual’s responsibility — not the spouse’s. But high-interest debt affects household cash flow for both partners.

    Prioritize paying off high-interest debt (credit cards, personal loans) before directing extra money toward lower-interest debt like student loans or mortgages. The debt avalanche method — paying minimums on all debts while directing extra payments to the highest interest rate first — typically minimizes total interest paid.

    Update Beneficiaries and Insurance

    Marriage triggers a series of administrative updates that many couples forget. Do these in the first few months:

    • Update beneficiaries on all retirement accounts (401(k), IRA), life insurance policies, and any payable-on-death bank accounts
    • Review health insurance coverage — compare your individual plans and determine whether it is cheaper to stay on separate employer plans or for one spouse to join the other’s plan
    • Review life insurance — if either partner would face financial hardship if the other died, life insurance is worth getting
    • Consider disability insurance — the risk of a long-term disability is much higher than the risk of premature death, and most employer plans cover only 60% of salary

    Coordinate Retirement Contributions

    If both partners have access to employer retirement plans (401(k), 403(b)), aim to contribute at least enough to get any employer match — that is free money. Beyond the match, consider:

    • Whether to contribute to traditional (pre-tax) or Roth accounts, based on your current and expected future tax rates
    • Whether one partner’s plan has better investment options or lower fees
    • Whether an IRA (traditional or Roth) makes sense as a supplement to employer plans

    As a married couple, you can also contribute to a spousal IRA — allowing a non-working or lower-earning spouse to fund their own IRA based on the working spouse’s income.

    Set Joint Financial Goals

    Money decisions are easier when you agree on what you are working toward. Common early-marriage financial goals include:

    • Building a down payment for a home
    • Paying off student loans
    • Saving for a first child
    • Building investment accounts
    • Taking a honeymoon or anniversary trip

    Write the goals down, assign a dollar amount and timeline to each, and track progress together. Celebrating small wins builds positive financial habits as a couple.

    Related: What Is a 72(t) Distribution?

    Bottom Line

    Financial planning for newlyweds is less about complex investment strategies and more about communication, coordination, and building good habits together. Get aligned on how you will manage accounts, build your emergency fund, address any debt, and work toward shared goals. Couples who talk openly about money and make financial decisions together are significantly more likely to stay on track — and significantly less likely to fight about money later.

  • What Is Disability Insurance and Do You Need It in 2026?

    Disability insurance replaces a portion of your income if you become unable to work due to illness or injury. It is one of the most commonly overlooked forms of financial protection — despite the fact that a 35-year-old has a greater statistical chance of becoming disabled before retirement than dying. If your income funds your life, disability insurance protects everything it funds.

    Short-Term vs. Long-Term Disability Insurance

    These are two distinct products:

    • Short-term disability (STD): Covers a temporary inability to work, typically for 3–6 months. Benefits usually begin after a short elimination period (0–14 days). Often provided by employers at no cost.
    • Long-term disability (LTD): Kicks in after short-term disability ends and can cover years, decades, or until retirement age, depending on the policy. This is the coverage that matters most for financial security.

    The most important policy to have is long-term disability — it is what protects you from a multi-year or permanent inability to work.

    How Disability Insurance Works

    A long-term disability policy pays a monthly benefit — typically 60%–70% of your pre-disability income — after the elimination period (the waiting period before benefits begin, usually 90 days). Benefits continue as long as you remain disabled, up to the benefit period defined in your policy (often “to age 65” or a specific number of years).

    Two critical policy definitions that determine how hard it is to collect benefits:

    • Own-occupation definition: You qualify for benefits if you are unable to perform the specific duties of your own occupation, even if you can work in some other capacity. This is the stronger definition and what you want, especially for specialized professionals.
    • Any-occupation definition: You only qualify if you are unable to do any work at all. This is a much harder bar to meet and is common in group policies and lower-cost plans.

    Group Coverage vs. Individual Coverage

    Many employers provide group long-term disability coverage — typically 60% of salary. This sounds good but has significant limitations:

    • Benefits are usually capped (often at $5,000–$10,000/month regardless of your salary)
    • Benefits paid through employer coverage are taxable if the employer paid the premiums
    • Coverage ends when you leave the job
    • Most group policies use the “any-occupation” definition after 24 months

    For professionals with higher incomes, high-earners, or anyone who needs portable, own-occupation coverage, an individual policy purchased through a broker or directly from an insurer (Guardian, Principal, MassMutual, Ameritas, The Standard are common providers) is worth the additional cost.

    How Much Coverage Do You Need?

    The general target is 60%–70% of your gross income. Factor in:

    • Monthly expenses: housing, food, healthcare, utilities, debt payments
    • Existing coverage: Social Security disability benefits (SSDI), employer group coverage, any existing individual policies
    • Emergency fund: a larger emergency fund can support a longer elimination period, which lowers premium costs

    What Disability Insurance Costs

    Individual long-term disability insurance typically costs 1%–3% of your annual income. A 35-year-old professional earning $80,000 might pay $800–$2,400 per year for a robust own-occupation policy. Factors that affect cost: age, health history, occupation (riskier jobs cost more), benefit amount, benefit period, elimination period, and policy riders.

    Who Needs Disability Insurance Most

    If you have dependents who rely on your income, a mortgage, student loans, or any financial obligations that require a steady paycheck — you need disability insurance. Self-employed workers and independent contractors especially need individual coverage, since they have no employer group policy at all. The people least likely to need it: those with enough passive income or assets to self-insure, or those with very low living expenses relative to savings.

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  • How to Save for Retirement in Your 40s: A Catch-Up Guide for 2026

    Your 40s are not too late to build serious retirement savings — but they are the decade where procrastination starts carrying a real cost. You still have 20–25 years of compounding ahead of you if you start now. The strategies that work in your 40s are different from your 20s: higher contribution limits, a clearer picture of your retirement timeline, and enough income to accelerate savings if you prioritize it.

    Know Where You Stand First

    Before making any changes, calculate your current retirement readiness:

    • Current balance: Total across all retirement accounts (401k, IRA, pension, etc.)
    • Annual savings rate: What percentage of income you are currently saving for retirement
    • Projected need: A rough estimate is 25x your expected annual expenses in retirement (based on the 4% withdrawal rule)
    • Gap: The difference between your projected balance at 65 and your target

    A common benchmark: by age 40, you should have roughly 3x your annual salary in retirement savings; by 45, roughly 4x. If you are behind, the plan below addresses exactly how to close the gap.

    Maximize Your 401(k) Contributions

    In 2026, the 401(k) contribution limit is $23,500. Starting at age 50, you can add an additional $7,500 catch-up contribution. If you are 40 and not yet contributing the maximum, this is the first lever to pull — especially if your employer offers a match. At 40, maxing out a 401(k) for 25 years at a 7% average return adds roughly $1.7 million to your retirement balance.

    If your employer’s 401(k) has poor fund options with high fees, at minimum contribute enough to capture the full employer match. Then direct additional savings to an IRA with better investment options.

    Fund an IRA in Addition to Your 401(k)

    IRA contribution limits for 2026: $7,000 ($8,000 if age 50+). If you have earned income and qualify, a Roth IRA is especially valuable for retirement savings in your 40s — contributions grow tax-free, there are no required minimum distributions, and it provides tax diversification alongside traditional pre-tax 401(k) savings.

    If your income exceeds the Roth IRA contribution limits ($161,000 single / $240,000 married in 2026), use the backdoor Roth strategy: contribute non-deductible funds to a traditional IRA and immediately convert to Roth.

    Consider a Health Savings Account (HSA)

    If you have a high-deductible health plan, an HSA is one of the most powerful retirement savings vehicles available. Contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free — making it the only triple-tax-advantaged account in the tax code. After age 65, you can withdraw for any purpose (non-medical withdrawals are taxed like a traditional IRA). Healthcare is often the largest expense in early retirement — building an HSA in your 40s specifically to cover future healthcare costs is a highly efficient strategy.

    Pay Down High-Interest Debt Aggressively

    Carrying high-interest debt into retirement is a retirement killer. Credit card debt at 20% APR or consumer loans in the teens should be eliminated before increasing investment contributions beyond the employer match. Every dollar of high-interest debt you eliminate is a guaranteed double-digit return. Prioritize: employer match → high-interest debt payoff → max tax-advantaged accounts.

    Increase Your Savings Rate, Not Just Your Balance

    The most powerful retirement lever in your 40s is your savings rate — the percentage of your income you save. Research consistently shows that savings rate matters more than investment returns for most people’s retirement outcomes. Moving from a 10% savings rate to a 20% savings rate cuts your time to retirement roughly in half. In your 40s, with many earning their peak income, this is the decade where increasing the savings rate from “good” to “excellent” can make up for a late start.

    Do Not Raid Retirement Accounts

    Withdrawing from a 401(k) or IRA before age 59½ triggers income tax plus a 10% penalty, and permanently removes money that would have grown tax-deferred. People in their 40s who take early withdrawals to cover emergencies or pay off other debts often set their retirement back by years. Build a 3–6 month emergency fund first so retirement accounts are genuinely off-limits.

    Work With a Fee-Only Financial Advisor

    Your 40s may be the right time for a one-time comprehensive financial plan with a fee-only fiduciary. A good advisor can help you model different scenarios — when you can retire, how much to save each year, optimal Social Security claiming strategy, and tax-efficient withdrawal sequencing. The cost of a one-time plan ($1,000–$3,000) is trivial compared to the value of getting the strategy right 25 years before retirement.

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    For more on this topic, see our guide on how the Backdoor Roth IRA can help high earners save more tax-free.

  • How to Choose a Financial Advisor: A Step-by-Step Guide for 2026

    Choosing the wrong financial advisor can cost you tens of thousands of dollars over a lifetime of compounding fees and conflicted advice. Choosing the right one can be one of the highest-leverage financial decisions you make. The key is knowing what questions to ask before you sign anything.

    Fiduciary vs. Suitability Standard

    This is the single most important distinction in the financial advisory industry. A fiduciary is legally required to act in your best interest at all times. A non-fiduciary advisor only needs to recommend products that are “suitable” for you — which leaves significant room to recommend higher-commission options over better alternatives.

    Registered Investment Advisors (RIAs) and Certified Financial Planners (CFPs) who work in a fiduciary capacity are your safest starting point. Before engaging anyone, ask directly: “Are you a fiduciary at all times, for all services?” If the answer is “sometimes” or hedged, walk away.

    How Financial Advisors Are Paid

    Compensation structure drives advice. Understanding how your advisor gets paid is non-negotiable:

    • Fee-only: Paid only by you — hourly, flat fee, or a percentage of assets under management (AUM). No commissions. This is the cleanest structure for avoiding conflicts of interest.
    • Fee-based: Charges fees AND earns commissions on products. Not necessarily bad, but the conflict exists and must be disclosed.
    • Commission-only: Paid only when they sell you a product. This structure creates the strongest incentive to sell — not always to advise.

    For most people, a fee-only advisor who charges hourly or flat-fee is the most transparent option. The NAPFA (National Association of Personal Financial Advisors) directory lists only fee-only, fiduciary advisors.

    Designations Worth Knowing

    The financial industry has hundreds of credentials — most are meaningless marketing. The ones that carry real weight:

    • CFP (Certified Financial Planner): Requires education, a rigorous exam, 6,000 hours of experience, and ongoing ethics standards. Best for comprehensive financial planning.
    • CFA (Chartered Financial Analyst): The gold standard for investment analysis. More relevant if you want pure investment management.
    • CPA/PFS (Personal Financial Specialist): A CPA with additional financial planning credentials. Useful if tax planning is a priority.

    You can verify credentials and check for disciplinary history at FINRA BrokerCheck (brokercheck.finra.org) and the SEC Investment Adviser Public Disclosure database.

    When Do You Actually Need an Advisor?

    Not everyone needs an ongoing advisory relationship. Consider what you actually need before committing to ongoing fees:

    • One-time financial plan: Appropriate for someone at a major life transition — getting married, having a first child, receiving an inheritance, or approaching retirement. Pay a flat fee for a comprehensive plan, then manage it yourself.
    • Ongoing management: Makes more sense if you have complex needs — business ownership, equity compensation, estate planning, or no interest in managing investments yourself.
    • Tax planning: If your tax situation involves multiple income streams, real estate, or business income, a CPA with financial planning expertise may deliver more value than a generalist advisor.

    Questions to Ask Before You Hire

    In an initial consultation, ask:

    • Are you a fiduciary 100% of the time?
    • How are you compensated — do you receive any commissions?
    • What is your typical client profile? Do you have experience with my situation?
    • What is your investment philosophy?
    • How often will we meet, and how do you communicate between meetings?
    • Can I see a sample financial plan?

    The AUM Fee Trap

    A 1% AUM fee sounds modest. On a $500,000 portfolio, it is $5,000 per year. Over 20 years, accounting for compounding on the fees themselves, that 1% can reduce your ending balance by 20% or more relative to managing the same portfolio yourself in low-cost index funds. AUM fees make more sense at early stages when hands-on guidance is needed — but reassess whether the ongoing fee is still justified as your situation stabilizes.

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  • What Is Net Worth and How to Calculate It: 2026 Guide

    Net worth is the most complete snapshot of your financial health: assets minus liabilities. It is the number that tells you where you actually stand — not just your income, not just your debt balance, but the difference between what you own and what you owe. Tracking it over time is one of the best habits in personal finance.

    The Net Worth Formula

    Net Worth = Total Assets − Total Liabilities

    Assets are everything you own that has financial value. Liabilities are every debt you owe. The difference can be positive (more assets than debt) or negative (more debt than assets). Negative net worth is common early in life — especially after student loans — and is not a crisis; the goal is consistent upward movement.

    How to Calculate Your Net Worth

    Step 1: List Your Assets

    Include:

    • Liquid assets: Checking and savings account balances, money market funds, cash
    • Investment accounts: Brokerage accounts, IRAs, 401(k)s, 403(b)s — use current market value
    • Real estate: The current estimated market value of property you own (not the purchase price)
    • Vehicles: Current market value (use Kelley Blue Book or similar)
    • Other: Business ownership stakes, vested stock options, life insurance cash value, collectibles at realistic resale value

    Step 2: List Your Liabilities

    Include:

    • Mortgage balance(s)
    • Auto loan balance(s)
    • Student loan balances
    • Credit card balances
    • Personal loan balances
    • Any other outstanding debts

    Step 3: Subtract

    Total assets minus total liabilities equals your net worth. Update this calculation at least quarterly — monthly if you are actively paying down debt or building savings.

    What Is a Good Net Worth?

    Net worth is most meaningful relative to age and goals, not as an absolute number. A commonly cited benchmark from financial research: by age 35, a net worth equal to roughly twice your annual salary; by 45, four times; by 55, seven times. These are rough averages — not personal mandates — but they provide directional context.

    The more important question is whether your net worth is growing year over year. A person with a $20,000 net worth who is growing it by $10,000 per year is in better shape than someone with a $200,000 net worth that has been flat for five years.

    What Net Worth Includes — and What It Does Not

    Net worth reflects financial assets and debts. It does not capture your future earning potential, your human capital (skills, education, career trajectory), or non-financial quality-of-life factors. A 28-year-old physician finishing residency may have a deeply negative net worth but exceptional financial prospects. Net worth is a snapshot, not the full story.

    How to Increase Your Net Worth

    Net worth grows by either increasing assets or reducing liabilities — ideally both simultaneously:

    • Automate savings and investments so that wealth-building happens by default, not willpower
    • Pay down high-interest debt aggressively — every dollar of credit card debt eliminated is a dollar added to net worth
    • Maximize tax-advantaged accounts (401k, IRA, HSA) — contributions and growth happen without eroding to taxes
    • Avoid lifestyle inflation — keeping expenses stable as income rises is the most reliable path to rapid net worth growth
    • Track it consistently — people who measure their net worth regularly make better financial decisions because they see the direct result of their choices

    Tracking Tools

    A simple spreadsheet is enough. Free tools like Empower (formerly Personal Capital) or Monarch Money can automate the process by aggregating your accounts, updating asset values, and calculating net worth automatically. The best tool is whichever one you will actually use consistently.

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  • How to Calculate Your Net Worth in 2026 (Step-by-Step Guide)

    Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

    Your net worth is a single number that shows where you stand financially. It is simple to calculate. And tracking it over time is one of the clearest signals of whether your finances are moving in the right direction.

    Rates and figures as of May 2026.

    The Net Worth Formula

    Net Worth = Total Assets – Total Liabilities

    Assets are everything you own that has value. Liabilities are everything you owe. The difference is your net worth.

    Net worth can be negative. Many people start their financial lives with negative net worth (usually due to student loans) and gradually build it up over time.

    Step 1: List Your Assets

    Write down everything you own with a dollar value. Include:

    Asset Type Examples
    Cash and savings Checking, savings, CDs, money market accounts
    Investments 401(k), IRA, brokerage account, stocks, ETFs
    Real estate Current market value of your home or rental properties
    Vehicles Kelley Blue Book value of your car, truck, or boat
    Business interests Ownership stake in a business you own
    Other Collectibles, jewelry (at resale value), life insurance cash value

    Use current market values, not what you paid. Your home is worth what you could sell it for today, not what you paid 5 years ago.

    Step 2: List Your Liabilities

    Write down every debt balance you owe:

    Liability Type Examples
    Mortgage Remaining balance on your home loan
    Auto loans Current payoff balance on car loans
    Student loans Total federal and private loan balances
    Credit card debt Total balances across all cards
    Personal loans Outstanding balances
    Other Medical debt, HELOC balance, family loans

    Step 3: Calculate the Difference

    Subtract total liabilities from total assets. That number is your net worth.

    Example:
    Assets: $320,000 (home $280,000 + retirement accounts $35,000 + savings $5,000)
    Liabilities: $210,000 (mortgage $195,000 + student loans $12,000 + credit card $3,000)
    Net Worth: $320,000 – $210,000 = $110,000

    What Is a Good Net Worth?

    Net worth varies enormously by age and income. The Federal Reserve’s Survey of Consumer Finances provides benchmarks:

    Age Group Median Net Worth Mean Net Worth
    Under 35 $39,000 $183,000
    35–44 $135,000 $549,000
    45–54 $247,000 $975,000
    55–64 $364,000 $1,567,000
    65–74 $409,000 $1,794,000

    Median is more useful than mean here — a small number of very high net worth individuals inflate the average significantly.

    How Often Should You Calculate Your Net Worth?

    Once a year is the minimum. Once a quarter is better. Many people use a simple spreadsheet and update it when they get account statements. Personal finance apps like Personal Capital (now Empower) and Mint can link your accounts and update it automatically.

    How to Increase Your Net Worth

    There are only two levers:

    • Increase assets: Save more, invest more, grow your home equity
    • Decrease liabilities: Pay off debt, especially high-rate debt first

    Both matter. But for most people in their 20s and 30s, aggressively paying down high-interest debt and maximizing retirement contributions moves the needle fastest.

    The Bottom Line

    Your net worth is a scoreboard for your financial life. Calculate it today, write it down, and check it again in 90 days. Tracking the number — even roughly — creates accountability and makes it easier to see that slow, boring financial decisions are actually working.

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  • What Is a Fiduciary Financial Advisor? How to Find One in 2026

    Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

    A fiduciary financial advisor is legally required to act in your best interest. That sounds basic — but not all financial advisors are held to this standard.

    Understanding the difference can save you thousands of dollars in fees and bad advice. Here is what you need to know.

    Rates and figures as of May 2026.

    What Does “Fiduciary” Mean?

    A fiduciary has a legal duty to put your interests first. They cannot recommend products that pay them higher commissions if a cheaper option would serve you better.

    This is different from a “suitability standard.” Under the suitability standard, an advisor only has to recommend products that are “suitable” — not necessarily the best option for you.

    Fiduciary vs. Non-Fiduciary: The Key Difference

    Feature Fiduciary Advisor Non-Fiduciary Advisor
    Legal standard Best interest Suitability
    Conflicts of interest Must disclose May not disclose
    Commission-based products Unlikely or disclosed Common
    Typical fee structure Fee-only or fee-based Commission-based

    Types of Fiduciary Advisors

    Fee-only advisors charge you directly — hourly, flat fee, or a percentage of assets. They earn no commissions. This removes most conflicts of interest.

    Fee-based advisors charge fees but may also earn commissions on some products. They may be fiduciaries in some situations but not all.

    Registered Investment Advisors (RIAs) are registered with the SEC or state regulators and are legally required to act as fiduciaries.

    How to Find a Fiduciary Advisor

    Ask directly: “Are you a fiduciary at all times?” A true fiduciary will say yes without hesitation.

    NAPFA (National Association of Personal Financial Advisors) lists fee-only fiduciaries. All NAPFA members are required to sign a fiduciary oath. Their search tool is free to use at napfa.org.

    Garrett Planning Network specializes in advisors who charge hourly — good if you only need occasional advice, not ongoing management.

    CFP (Certified Financial Planner) is a credential that requires fiduciary duty when providing financial planning — but not when selling investment products.

    What to Ask Before Hiring

    • Are you a fiduciary 100% of the time?
    • How are you compensated? Do you earn commissions?
    • What is your fee structure?
    • Are you registered with the SEC or state regulators?
    • Can you provide a Form ADV (the SEC disclosure form)?

    How Much Does a Fiduciary Advisor Cost?

    Most charge 0.5%–1.5% of assets under management per year. On a $500,000 portfolio, that is $2,500–$7,500/year. Fee-only planners may charge $150–$400/hour or $2,000–$5,000 for a full financial plan.

    Compare this to commission-based advisors who may appear free but earn 1%–6% commissions on products they sell you.

    Do You Need a Fiduciary Advisor?

    Not everyone does. If you have a simple financial situation — steady income, employer 401(k), no complex tax issues — you may do fine with target-date funds and free resources.

    A fiduciary advisor is worth considering if you have complex investments, an inheritance, a business, estate planning needs, or approaching retirement.

    The Bottom Line

    Always work with a fiduciary advisor when you need financial advice. The legal obligation to act in your interest changes the nature of the relationship. Find one through NAPFA, get the fee structure in writing, and ask the fiduciary question directly before signing anything.

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  • Best Financial Advisors 2026: How to Find One (and If You Even Need One)

    For quick financial questions, see our guide to how AI is changing personal finance — and try AskMyFinance for instant answers.

    Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

    A financial advisor can help you manage your money, plan for retirement, and reach big financial goals. But not all advisors are the same. Some charge a flat fee. Others earn commissions. Knowing the difference can save you thousands.

    This guide explains the types of advisors, how to find a good one, and whether you even need one.

    Figures as of May 2026.

    Types of Financial Advisors

    Fiduciary Advisors

    A fiduciary is legally required to act in your best interest. This is the gold standard. Always ask if an advisor is a fiduciary before hiring them. Many are not.

    Fee-Only Advisors

    Fee-only advisors charge you directly — by the hour, by the project, or as a percentage of your assets. They do not earn commissions. This means they have no incentive to push products that are not right for you.

    Look for fee-only advisors through NAPFA (napfa.org) or the Garrett Planning Network.

    Fee-Based Advisors

    Fee-based advisors charge fees and may also earn commissions. This is not the same as fee-only. Commissions can create conflicts of interest. Ask about all compensation before you start.

    Robo-Advisors

    Robo-advisors use algorithms to manage your money. They are cheap — usually 0.25% of assets per year or less. They are great for straightforward investing but offer no personalized advice for complex situations.

    Top robo-advisors include Betterment, Wealthfront, and Fidelity Go.

    What Does a Financial Advisor Cost?

    Advisor Type Typical Cost
    Robo-advisor 0.00%–0.35% per year
    AUM-based advisor 0.50%–1.50% per year of assets managed
    Hourly fee-only advisor $200–$500 per hour
    Flat fee / retainer $2,000–$7,500 per year
    One-time financial plan $1,500–$5,000

    How to Vet a Financial Advisor

    • Ask if they are a fiduciary. Get it in writing.
    • Ask how they are compensated. Commission? Flat fee? Percentage of assets?
    • Check their credentials. Look for CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst).
    • Check their background at BrokerCheck (finra.org/brokercheck) or the SEC’s advisor database.
    • Ask for references from clients with similar situations.

    Free Alternatives to Paid Advisors

    You do not always need to pay for advice. These options are free:

    • Fidelity: Free one-on-one planning sessions for account holders.
    • Charles Schwab: Free financial consultations available at branches and online.
    • Vanguard Personal Advisor: Low-cost hybrid human/robo service for Vanguard investors.
    • CFPB Consumer Tools: The Consumer Financial Protection Bureau offers free educational tools at consumerfinance.gov.

    When DIY Is Fine

    You may not need a financial advisor if:

    • Your finances are simple (steady income, basic retirement accounts)
    • You are comfortable managing your own investments
    • You use low-cost index funds and a robo-advisor
    • You are early in your career and just getting started

    For most young people, the best starting moves are self-directed: build an emergency fund, max out your 401(k) match, and open a Roth IRA. Read our guide to how to create a financial plan in 2026 for a full DIY framework. Track your progress over time using our net worth calculator guide. And understand how much you should have saved at each stage with our retirement savings by age benchmarks.

    Frequently Asked Questions

    What does a financial advisor do?

    A financial advisor helps you create a plan for your money. They can help with budgeting, investing, retirement planning, tax strategy, insurance, and major life decisions.

    What is a fiduciary financial advisor?

    A fiduciary is legally required to act in your best interest. They cannot recommend products just because they pay a higher commission. Always choose a fiduciary when possible.

    How much does a financial advisor cost in 2026?

    Costs vary widely. Robo-advisors charge as little as 0.25% per year. Human advisors typically charge 1% of assets annually, $200–$500 per hour, or $2,000–$7,500 per year on retainer.

    Do I need a financial advisor?

    Not everyone does. If your finances are straightforward and you are comfortable managing your own investments, you can do it yourself with free tools. A financial advisor adds the most value during complex situations like divorce, inheritance, or business ownership.

    What credentials should a financial advisor have?

    Look for a CFP (Certified Financial Planner). This is the most recognized planning credential. The CFP designation requires education, a difficult exam, work experience, and ongoing ethics standards.

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  • Net Worth Calculator: How to Track and Grow Your Wealth in 2026

    Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

    Your net worth is one of the best measures of financial health. It is simple to calculate. And tracking it over time shows you if you are moving in the right direction.

    This guide explains how to calculate your net worth, what it means, and how to grow it.

    Data as of May 2026.

    What Is Net Worth?

    Net worth = Assets minus Liabilities.

    Assets are things you own that have value. Liabilities are debts you owe. If your assets are worth more than your debts, you have a positive net worth. If you owe more than you own, it is negative.

    What Counts as an Asset?

    • Cash and bank account balances
    • Investment and retirement accounts (401k, IRA, brokerage)
    • Home value (current market value)
    • Car value
    • Other property you own
    • Business ownership stakes

    What Counts as a Liability?

    • Mortgage balance remaining
    • Car loan balance
    • Credit card debt
    • Student loan balance
    • Personal loan balance
    • Any other debt you owe

    Net Worth Calculator Example

    Category Item Value
    Asset Checking account $3,000
    Asset Savings account $12,000
    Asset 401(k) $45,000
    Asset Home value $280,000
    Asset Car value $18,000
    Total Assets $358,000
    Liability Mortgage balance $210,000
    Liability Car loan $9,000
    Liability Credit card debt $2,500
    Total Liabilities $221,500
    Net Worth $136,500

    Average Net Worth by Age in the US (Federal Reserve Data, 2026)

    Age Group Median Net Worth Mean Net Worth
    Under 35 $39,000 $183,000
    35–44 $135,000 $549,000
    45–54 $247,000 $975,000
    55–64 $364,000 $1,566,000
    65–74 $409,000 $1,794,000
    75+ $335,000 $1,624,000

    The median is a better measure than the mean. The mean is skewed high by very wealthy households.

    Best Free Tools to Track Net Worth

    • Empower (formerly Personal Capital): Connects your accounts. Shows net worth in real time. Free to use.
    • Mint: Budget and net worth tracker. Easy to use. Free.
    • YNAB (You Need a Budget): Focused on budgeting, but also tracks net worth. Paid, but highly rated.
    • A simple spreadsheet: List your assets and liabilities. Update it monthly. Sometimes simple is best.

    How to Grow Your Net Worth

    • Build an emergency fund so you do not go into debt during a crisis. See how much you need in our emergency fund guide for 2026.
    • Pay down high-interest debt first. Credit card debt at 20%+ APR destroys wealth fast.
    • Contribute to your 401(k) and IRA. Tax-advantaged accounts are one of the fastest ways to grow wealth.
    • Use the 50/30/20 budget rule to make sure you are always saving a portion of income.
    • Consider opening a Roth IRA for tax-free growth in retirement.

    Frequently Asked Questions

    How do you calculate net worth?

    Net worth equals your total assets minus your total liabilities. Add up everything you own (savings, home, investments) and subtract everything you owe (mortgage, loans, credit card debt).

    What is a good net worth at age 35?

    The Federal Reserve reports that the median net worth for households under 35 is about $39,000. By 35–44, it rises to around $135,000. These are medians — do not panic if you are below. What matters is the direction you are trending.

    Does a car count as an asset for net worth?

    Yes. A car is an asset at its current market value. But cars depreciate quickly. The outstanding loan on the car is a liability. Many people owe more on a car than it is worth.

    What is a negative net worth?

    A negative net worth means you owe more than you own. This is common early in adulthood — especially with student loans or a new mortgage. Focus on paying down high-interest debt to turn it positive.

    How often should I calculate my net worth?

    Once a month or once a quarter is ideal. Tracking it regularly helps you spot trends and stay motivated.

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