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What Is a Financial Planner, and Do You Need One?

What Is a Financial Planner, and Do You Need One? Leave a comment

Whatever the stage in your financial journey, you’re bound to have questions. From starting out and saving for college through to buying your first home or even planning for your retirement, getting your finances organized can be a little daunting. Everyone you know is likely to have an opinion when you ask a financial question, but does that mean that you’re getting the right answers?

While having an emergency fund is great, becoming financially savvy requires much more than this. Fortunately, financial planners are ready to help. Here we’ll explore the role of the financial planner to help you determine if you need one.

What is a Financial Planner?

Financial planners are a type of financial advisor, and their primary role is to make projections to help you formulate a plan to achieve your financial goals. A financial planner gathers financial statements and other information to calculate “what if” scenarios to help you to plan for the future.

These types of projections can help you to determine a number of issues, including:

  • How much you should save
  • What investments you should make
  • Your income level in retirement
  • When you could retire
  • The life insurance policy you should choose
  • How you can protect your savings
  • Whether you should put money into your 401k or pay off your mortgage.

Some of these issues are not easy to consider; looking into the future can not only be daunting, but challenging. However, a financial planner can take the emotion out of these issues to help you make informed decisions.

The Benefits of Financial Planners

There are a number of benefits associated with using a financial planner. These include:

  • Pro Answers to Your Questions: As we discussed above, trying to get the right answers to your financial queries can be tricky, but a financial planner can provide you with professional advice and guidance. This means that you no longer need to rely on the dodgy details provided by your Uncle Bob at family gatherings.
  • Help Focusing on Your Financial Goals: Most people can feel overwhelmed by their finances and prioritizing your goals is the first step. Financial planners can help you to focus your energy on the most important or urgent goals, so you can start developing a solid financial future.
  • Gain Access to Insurance Deals and Stocks: According to , over 90% of the 350,000 financial planners in the USA receive commissions from the products they sell. This means that you need to ensure that your financial planner puts your interests first, but it can provide access to some exclusive deals and offers.
  • Specialist Expertise: Some financial planners specialize in specific areas. So, if you’re concerned about retirement, you can use a financial planner who focuses on retirement plans. However, if you’re more concerned about wealth building, you need a financial planner who focuses on savings plans.

As you can see, a financial planner can offer some great benefits for people in all financial situations. Regardless of what stage you’re at in your financial journey, a financial planner can help you work towards your goals.

The Types of Financial Planner

Fortunately, there are different types of financial planners to help fit your circumstances, budget, and preferences. These include:

In-Person, Traditional Financial Planners:

When you think about a financial planner, you’re likely to imagine an in-person traditional expert. In-person planners provide one on one advice, which is ideal for those with a complicated financial situation. Traditional financial planners typically have accreditation, indicating stringent formal training and assessment.

Unfortunately, you do need to pay for this expertise. You may be expected to pay by the task or by the hour, which is typically $200 to $400 an hour. However, some financial planners charge based on the investment portfolio size.

Before you start working with a traditional financial planner, you need to know whether the person is a fiduciary. This means that they are under an obligation to put the best interests of the client first. Otherwise, you may find that the recommendations for products and services are based on commission fees and other benefits for the adviser rather than yourself.

According to a CNBC survey, only 17% of Americans take this route and use a professional financial advisor.

Robo Advisors:

If you’re just getting to grips with your finances, then a Robo advisor may provide adequate access to financial planning tools. Robo advisors are designed to build and manage investments and other financial planning tasks for a small fee. This is typically 0.25% of the account balance or less.

The investment mixes are determined by algorithms and can be automatically adjusted as needed. Basic accounts typically only require an investment of $500, but some options have lower minimums.

The easy entry, low-cost nature of the Robo advisor means that the barriers for working on your financial goals are reduced. So, you can start off using a robo advisor, and bring in a human advisor later if your situation becomes more complex.

Online Services:

There are also a number of online services that provide a combination of access to human advisors and computer-driven investment management. In most cases, you’ll have a dedicated financial planner, but you’ll be meeting via video conference or email rather than in person.

These types of services are typically more costly compared to using a robo advisor, but this is less than using a traditional financial planner.

So, Do You Need a Financial Planner?

To achieve any degree of financial stability or freedom, you need to have financial goals, but it can be a real challenge to prioritize or even set your goals. A financial planner can help you to assess your financial situation and understand the best way of working towards achieving your goals.

So, if you’re serious about getting a grasp of your finances and setting some financial goals, then you should give getting a financial planner some serious consideration. Whether you choose to use a robo advisor, traditional financial planner, or an online service, these experts can help you work towards achieving your financial goals.

Author Bio:

Lorraine Halton enjoyed a successful career in the finance industry and now uses this expertise as a professional writer. Through her blog posts and articles, she helps people to improve their financial health. Whether you need to organize a budget, save money or plan your financial future, Lorraine can help.

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