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Can a Financial Advisor Help with Debt?
by
JG Wentworth
•
September 20, 2024
•
8 min
What is a financial advisor?
A financial advisor is a professional who provides financial guidance to clients based on their needs and goals. While many people associate financial advisors primarily with investment management and retirement planning, many advisors also specialize in debt management and credit counseling.
Financial advisors can have various certifications and specializations, including Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), or Accredited Financial Counselor (AFC). Some may also be licensed as Certified Public Accountants (CPAs) with a specialization in personal financial planning.
How financial advisors can help with debt
Financial advisors can provide valuable assistance in several areas related to debt management:
Comprehensive financial assessment
One of the primary ways a financial advisor can help with debt is by conducting a thorough assessment of your overall financial situation. This typically includes:
- Analyzing your income, expenses, assets, and liabilities.
- Reviewing your credit report and credit score.
- Assessing your current debt load and interest rates.
- Evaluating your financial goals and priorities.
This comprehensive review allows the advisor to understand your complete financial picture and develop tailored strategies for debt management.
Debt management strategies
Based on the financial assessment, an advisor can recommend appropriate debt management strategies, such as:
- Debt consolidation: Combining multiple debts into a single loan with a potentially lower interest rate.
- Debt snowball or avalanche methods: Strategies for paying off debts in a specific order to maintain motivation or minimize interest payments.
- Balance transfer options: Utilizing credit card balance transfers to reduce interest payments.
- Refinancing: Exploring options to refinance high-interest debts for better terms.
- Debt settlement: In some cases, negotiating with creditors to settle debts for less than the full amount owed.
Budgeting and cash flow management
Financial advisors can help create a realistic budget that prioritizes debt repayment while ensuring that essential expenses are covered. This might involve:
- Identifying areas where expenses can be reduced.
- Suggesting ways to increase income.
- Developing a cash flow management plan to ensure bills and debt payments are made on time.
- Creating an emergency fund to prevent future reliance on debt.
Negotiation with creditors
Some financial advisors may assist in negotiating with creditors on your behalf. This can include:
- Requesting lower interest rates.
- Negotiating payment plans.
- Exploring hardship programs offered by creditors.
Long-term financial planning
Beyond immediate debt management, financial advisors can help develop long-term financial plans that include:
- Strategies to avoid future debt.
- Saving and investment plans for financial goals.
- Retirement planning.
- Risk management and insurance needs.
Types of financial advisors for debt help
When seeking help with debt, you might encounter different types of financial advisors:
- Fee-only financial planners: These advisors charge a flat fee, hourly rate, or a percentage of assets under management. They do not receive commissions for recommending specific financial products.
- Fee-based financial advisors: These advisors charge fees for their services but may also earn commissions from certain financial products they recommend.
- Credit counselors: Specializing in debt management, these professionals often work for non-profit organizations and provide advice on budgeting, debt management plans, and credit issues.
- Debt relief specialists: These advisors focus specifically on debt relief strategies, including debt settlement and negotiation with creditors.
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Benefits of Using a Financial Advisor for Debt
Working with a financial advisor for debt management can offer several advantages:
- Expertise and experience: Financial advisors bring professional knowledge and experience in dealing with various debt situations.
- Objective perspective: An advisor can provide an unbiased view of your financial situation, free from emotional attachments.
- Education: Advisors can help you understand the underlying causes of your debt and teach strategies to maintain financial health in the future.
- Accountability: Regular meetings with an advisor can help keep you accountable to your debt repayment goals.
- Stress Reduction: Having a professional guide can alleviate some of the stress and anxiety associated with managing debt.
Potential Drawbacks
While financial advisors can be very helpful, there are some potential drawbacks to consider:
- Cost: Financial advisors charge for their services, which can be a concern for those already struggling with debt.
- No guarantee of success: While advisors can provide expert guidance, the outcome ultimately depends on your ability to follow through with the plan.
- Potential conflicts of interest: Some advisors may have conflicts of interest if they earn commissions from recommended products.
- Time investment: Working with an advisor requires time for meetings, gathering financial documents, and implementing strategies.
Alternatives to financial advisors for debt help
While financial advisors can be valuable, there are alternatives to consider:
- Credit counseling agencies: Non-profit organizations offering free or low-cost debt management advice.
- Debt relief companies: For-profit companies specializing in debt settlement and negotiation.
- DIY approach: Using books, online resources, and budgeting apps to manage debt independently.
- Bankruptcy attorneys: For severe debt situations, consulting with a bankruptcy attorney might be necessary.
The bottom line
Financial advisors can indeed be a valuable resource for individuals struggling with debt. They offer expertise, personalized strategies, and a comprehensive approach to not only addressing current debt issues but also improving overall financial health. However, it’s crucial to carefully consider your specific needs, the potential costs, and the qualifications of any advisor you’re considering.
Remember that while a financial advisor can provide expert guidance and support, successfully managing and eliminating debt ultimately requires your commitment and follow-through. Whether you choose to work with a financial advisor or pursue alternative methods, taking proactive steps to address your debt is a positive move towards financial stability and peace of mind.
There’s always JG Wentworth… 
Do you have $10,000 or more in unsecured debt and would prefer a debt relief program with zero upfront fees? If so, there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include: 
- One monthly program payment 
- We negotiate on your behalf 
- Average debt resolution in as little as 48-60 months 
- We only get paid when we settle your debt  
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side? 
About the author
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in any other state contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required. 
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment. 
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy. 
