Do You Need a Financial Planner?

As much as we all like to say that it’s not, money is important. It’s the lifeblood of our society, the reason you get up in the morning and the thing that keeps us in our homes.

Okay, that sounds a little bleak. Of course, there’s also love, family, friendship and happiness. But money, whether we like it or not, is vital to our well-being. The problem is, managing your money can sometimes feel too complex and difficult for the average person, especially when life starts throwing you curveballs.

Why not bring in an expert? Financial planners can help you sort through all the difficult decisions that come with making long-term financial goals and teach you how to manage your finances in a responsible and forward-thinking way.

What Do Financial Planners Do?

A financial planner is a type of financial advisor whose job is to work with you to create a personalized plan that helps you manage your budget and achieve your financial goals.

Hiring a financial planner means you have an expert at your disposal who can give you informed and helpful advice on how to manage one of the most vital aspects of your life.

A financial planner can identify areas you need to work on, such as overspending or poor saving habits, and create a plan to help you get where you need to be. They can take out the guesswork of how much you need to save to be on track for retirement and help you figure out what types of accounts you should be putting that money into. They may even manage certain assets for you, such as an investment portfolio, helping you make the best decisions for those assets based on your personal situation.

Essentially, financial planners can help you navigate the often confusing world that is being an adult with money.

Who Needs a Financial Planner?

People with few variables (kids, homeownership, significant wealth, big long-term goals) in their financial profiles will likely feel relatively comfortable in managing their day-to-day finances without professional help.

For those whose financial situations are starting to get more complex, it may make sense to hire a planner to create a financial roadmap for them. People who just got married or are planning on having kids may want to speak with a planner about how to successfully blend their finances with their spouse’s or what type of college savings accounts they should consider opening. They can also help you figure out your finances if you’re going through a divorce.

Retirement is another aspect of financial planning that some people feel unsure of how to do on their own. A planner can do all the difficult math for you and tell you how much you need to be saving now to be ready for the future.

A planner will also be able to guide you through difficult situations that affect your finances, such as a job loss or the death of a spouse.

Hiring a financial professional can be useful for anyone, even those who don’t have any of these specific financial needs. If you’re able to afford it, talking with a financial planner can help you figure out your finances and set some long-term goals for yourself.

Is It Worth It?

Maybe you’re considering hiring a financial planner, but aren’t sure if the benefits are worth the cost.

How much a financial planner will cost depends on how the planner charges clients. Some planners charge on an hourly basis, while others charge a lump sum for a personalized plan. If your planner manages any of your assets, they may take a small percentage of that account’s balance as payment for their services (usually around 1%).

How much you spend will likely depend on what your needs are. If you have a complex financial situation that requires year-round services, you might pay a few thousand dollars a year to have your planner on retainer.

On the other hand, if you only need a few consultations to get advice on what you need to be doing and check in on your progress, you might pay a couple hundred dollars per hour for planning services, or you might pay a larger flat fee for a personalized plan.

You might balk at the idea of spending money to save money, but if you’re having trouble keeping track of your finances or sticking to financial goals on your own, a financial planner may end up paying for themselves many times over.

Finding the Right Planner

If you have a specific area of your finances you’re looking to plan for, such as retirement, be sure to look for planners who specialize in that.

You’ll want to look at any prospective advisor’s certifications. There are many different types of certifications for financial professionals. Typically, planners will hold either a CFP (certified financial planner) or ChFC (chartered financial consultant) certification. Planners who deal in investments will likely hold a CFA (chartered financial analyst) certification. Certification lets you know that your advisor is properly educated in that area.

Beyond that, you want to find someone who you feel understands your goals and will help you achieve them. While they’re the expert, you want someone who respects your input and makes an effort to ensure you understand their recommendations.

If your financial situation is fairly simple and you don’t feel the need to hire a financial planner, you might consider looking at robo-advisors. Robo-advisors are automated investment portfolio managers, meaning you won’t be working with a human, and you won’t have access to the full suite of services you’d get from a human planner.

Robo-advisors are great if you’re looking to start saving for retirement or other long-term goals and don’t have a complex financial situation that requires personalized advice. If you have a more complicated situation or want help with other aspects of your finances, not just your investments, a human advisor would likely be a better fit for you.

Is hiring a financial planner worth it? Share your thoughts with us in the comments below!

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