Do You Need a Financial Planner?


If you have questions regarding your finances, investments, taxes, or retirement, speaking with a financial planner can provide the answers you need. A certified financial planner (CFP) can help you organize your personal finances and establish a retirement plan. They can also help you make sense of financial problems, whenever they may arise.

Most respectable planners will advise you if they think you can handle your finances on your own. However, you can't always count on them to turn you away, which is why we've covered some of the top reasons to hire a financial planner, as well as what to expect once you hire them.

1. You Need to Change Your Retirement Plan

Whether you are changing your retirement plan, or haven't started planning at all yet, a financial planner can assist. They can help you develop a plan for financial security both now and into retirement. If you need to save more, they can help you develop a solid plan to increase your savings and contributions. That said, many people are comfortable planning for their own retirement, and if you're investment-savvy enough to do so on your own, a financial planner may be unnecessary.

2. You Need Financial or Investment Advice

If you have trouble organizing your finances and payments, a planner can help you get a grip on it. A financial planner can provide you with investment advice and explain the pros and cons of various investments options. They can also help you develop a strategy for down markets to better protect your money before retirement.

All forms of investments and retirement accounts have associated management fees and expenses. If you are unsure of what you're paying for your investments, it's time to speak with a financial advisor. They can explain what your funds cost and can determine if you are spending more than necessary.

3. You Receive a Big Tax Refund Every Year

If you consistently receive a tax refund, you should speak with an adviser about what you owe and what you should be paying. While it may be nice to receive a tax refund at the end of the year, you won't gain any interest on the money when it's in Uncle Sam's possession. Instead, it would benefit you more to receive that money throughout the year. Your planner can help you adjust your tax withholdings so that you aren't overpaying throughout the year.

4. You Got Married

Determining which debts to combine, which debts to pay off, and what you need to do to reach your financial goals as a couple can be very difficult (especially for the newly married). Instead, let a financial advisor deal with the finances and help you organize your spending, debts, and assets. They will help you determine which strategy is right for your taxes, investments, benefits, bank accounts, and personal finances. They can even help you determine what your spouse's retirement plan may be able to offer you.

5. You Are Planning a Big Purchase or Making a Big Change

If you are planning on purchasing a home, or making another large purchase, a professional can help you determine how much you can afford to spend. They can then help you develop a plan to meet your financial goals and afford the home or purchase of your dreams. They can also help you prepare for life's big events, such as an upcoming baby, career change, or new car.

6. You Own a Business

Owning and running a business can be very stressful. Having a planner on your side can help you organize your business expenses and taxes, employee benefits, business investments, and any other financial information related to your business. If you will be buying, selling, or passing on a family business, a financial planner can make sure everything progresses smoothly.

What You Can Expect

One thing that a financial planner cannot provide is a guarantee. All they can do is help you get your financial life in order; they can't make miracles happen. What they can do is help you see the big picture and find ways to create more wealth over time, such as by capitalizing on compound interest.

After getting to know you and your financial goals, your planner can help you create a written investment plan to reach them. They will assess all your current assets, liabilities, income, and more to develop a comprehensive plan that you can actually stick to. They can also advise you if you are paying too much for something, saving you even more money over time.

Monitoring Your Progress

Over time, your planner will continue to periodically monitor your progress to ensure you are still on track to meet your financial goals today, tomorrow, and into retirement. They will likely be your trusted financial partner for life because they can help you make wise, informed choices before you make any large financial decisions.

Finding an Advisor

If you can get a referral from a colleague, lawyer, or Certified Public Accountant (CPA), this is usually a good place to start your search for a financial planner. You can also search the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA) for a list of potential advisors.

There are a number of types of financial planners available to you, including the following:

  • CFP: Certified financial planners can help you with things like insurance, investments, taxes, retirement, employee benefits, and estate planning.
  • ChFC: Chartered financial consultants specialize in finance and investing.
  • CLU: Chartered life underwriters specialize in the finance industry.
  • CFA: Chartered financial analysts specialize in economics, accounting, portfolio management, and security analysis.
  • CPA: Certified public accountants specialize in tax issues.

In most cases, a CFP is the right professional for the job, unless you have unusual financial or investment needs.

What Do They Charge?

Each advisor is different and will charge according to the following three basic billing structures:

  • Fee-only planners: They are paid for their advice only.
  • Fee-based planners: They earn fees for their advice and commission on the products they sell.
  • Commission-based planners: They make commission on the products they sell.

Some planners will charge a flat fee, hourly rate, or a percentage of what they are managing. According to CNNMoney, the average financial planner will charge anywhere from $100–$400 per hour. They may also charge a percentage of your assets if they also manage your money, usually between 0.5%–2%. If you only need a portfolio checkup every once in a while, then you likely only need a few hours, on a fee-only pay structure. It wouldn't make sense to continue paying an ongoing percentage if you don't need ongoing help.

Can You Do It Alone?

You may not need a financial advisor if you feel confident managing your finances, investments, and retirement accounts on your own. If you enjoy researching your investments and feel confident that you are monitoring your retirement plan well enough on your own, then you likely don't need an advisor.

Do you have a financial planner? How have they helped you? Please share your thoughts in the comments!

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