Key Takeaways
- Advisors provide clarity when you can't think straight
- Fee-only advisors have fewer conflicts of interest
- Hourly consultations can be affordable for one-time questions
Last updated: December 2025
The Value of Professional Guidance
"I've never needed a financial advisor" — A layoff might be exactly when you need one.
What a Good Advisor Does During a Layoff
| Service | How It Helps |
|---|---|
| Runway analysis | 12-month projection of your finances |
| Severance review | 80% of packages are negotiable |
| Health insurance comparison | COBRA vs. Marketplace math (8/10 qualify for subsidies) |
| Investment check | Prevent panic-selling |
| Retirement strategy | 401k rollover, Roth conversion, Rule of 55 |
| Tax planning | Optimize low-income year |
| Emotional anchor | Calm voice during chaos |
The Value of Professional Advice
| Finding | Source |
|---|---|
| 1.5-3% additional annual returns | Vanguard, Russell, Morningstar studies |
| 61% of advised investors agree advisor positively impacted value | Industry research |
| During 2020 crash: Investors without advisors who panic-sold saw dramatic losses | Behavioral studies |
Advisors prevent costly mistakes: cashing out retirement (30-40% loss to taxes/penalties), continuing normal spending patterns, not filing for unemployment, making emotional decisions.
When to Engage
| Timing | Why |
|---|---|
| Before layoff (if you see it coming) | Prepare financially and emotionally |
| Within first week | Before you make expensive mistakes |
| When making major decisions | Selling house, relocating, etc. |
| When confused | Better to ask than guess wrong |
Questions to Ask an Advisor
Cash Runway:
- "How many months of expenses can my savings and severance cover?"
- "What's the minimum emergency fund I should maintain?"
Investment Strategy:
- "Should I make any changes to lower-risk investments given my reduced income?"
- "How should I handle my 401(k)—leave it, roll it over, or consider Rule of 55?"
Tax Optimization:
- "Should I take severance as lump sum or installments?"
- "Is this a good year for a Roth conversion?"
- "What tax-advantaged accounts should I maximize? (HSA: $4,300/$8,550 for 2025)"
Mistakes to Avoid:
- "What mistakes do you see people in my situation make?"
- "What am I not thinking about?"
Finding the Right Advisor
| Feature | What to Look For |
|---|---|
| Fee structure | Fee-only (not commission-based) |
| Credentials | CFP (Certified Financial Planner) |
| Experience | Has worked with layoff situations |
| Availability | Can meet quickly when you need help |
| Communication | Explains things clearly |
Fee Structures (2025)
| Type | How It Works | Conflicts | Fiduciary? |
|---|---|---|---|
| Fee-only | Hourly or flat fee | Fewest | Yes, legally required |
| Fee-based | Mix of fees and commissions | Moderate | Varies |
| Commission-only | Paid by products sold | Major | Only "suitability" standard |
| AUM (% of assets) | % of what they manage | Low | Usually yes |
Key stat: Only 4.92% of financial professionals operate as fee-only fiduciaries.
2025 Advisor Costs
| Option | Cost |
|---|---|
| Hourly consultation | $200-400/hour (median $300, up from $250 in 2022) |
| Comprehensive financial plan | $1,000-3,000 flat fee |
| Annual retainer | $6,000-10,000 |
| AUM fee (>$1M portfolio) | 1.02% median (drops to 0.75% at $2M+) |
Finding the Right Advisor
| Resource | Website |
|---|---|
| NAPFA (fee-only directory) | napfa.org |
| CFP Board | letsmakeaplan.org |
| Garrett Planning Network | garrettplanningnetwork.com |
A few hundred dollars for professional guidance can save thousands in mistakes.
Test Your Knowledge
What type of financial advisor fee structure has the fewest potential conflicts of interest?
A
B
C
D