Should you spend your hard-earned money on a meeting with a financial planner? Tyler Dolan, CFP®, weighs in.
Confession: I’ve been putting off my annual physical. I know it’s important, but I just haven’t prioritized it…yet.
I suspect many Grownups feel the same about meeting with a financial planner. They may think planners are only for rich people (not true). They may not trust an unfamiliar person, especially with something as personal as finances. And many just don’t know what a planner actually does.
Annual checkups with your doctor, dentist, and mechanic are always a good idea—and it’s the same for financial planning, too. (I promise, I’ll make that doctor’s appointment.) In the meantime, here’s why making a financial planning appointment may be a worthwhile add to your to-do list.
So, what does a financial planner actually do?
I believe a financial planner should take a “big picture” view of your financial life, help you define and prioritize your goals, and design a plan to help get you there. So, what does the big picture include?
- Values: understand what’s important to you
- Goals: help you articulate and prioritize what you want
- Budget analysis: understand incomes, expenses, and if there’s anything leftover
- Assets and liabilities: become familiar with what you own and what you owe
- Investment analysis: determine if everything is in line with your goals and risk tolerance
- Retirement planning: guide you on the right track for life after work
- Employee benefits: help you fully utilize what your employer offers
- Taxes: understand how your tax situation fits into your financial plan
- Education planning: help you prepare for your children’s future
- Risk management: determine your insurance and other coverage needs
- Estate planning: make sure that your wishes are carried out after you’re gone.
There are a lot of financial professionals who specialize in one or several areas: insurance sales reps, investment managers, and college planning specialists, for example. Most financial specialists make sales commissions, so it can be difficult to understand how they are paid.
Check and see if your financial planner is a CERTIFIED FINANCIAL PLANNER™ professional and/or works at a Registered Investment Advisor (RIA). Those types of planners are required to act as a fiduciary to their clients, meaning they have a legal obligation to avoid conflicts of interest with the client. This fiduciary standard is applied to any financial advice given to clients.
Your values and goals are interrelated, and a holistic financial planner may be well equipped to take the big picture view and show how finances can work toward the life you want, all in an understandable way.
That doesn’t mean that a holistic financial planner is an expert in every aforementioned topic. Think of a holistic financial planner as a general practitioner in the medical industry. (Yep, the one that I need to call.) A general practitioner is a professional who has a broad knowledge about the medical field and how it relates to their patients. If a patient comes in with something that’s beyond their expertise, the general practitioner can refer the patient to a specialist (dermatologist, orthopedic, cardiologist). If a client has a particular situation that’s beyond a financial planner’s expertise, a referral may be made to a tax professional, a life insurance expert, or an estate planning attorney.
In sum, financial planning is more than a budgeting exercise and investment guidance. It’s about helping you get and stay on track to meet your goals.
When should you consider meeting with a financial planner?
When making a decision about money, if you’ve ever asked yourself “should I talk to someone about this?” or “am I doing this right?”, you should consider meeting with a financial planner. Some people look to family or friends for advice when it comes to big Grownup decisions, but often they aren’t the best resources. They may already have their own preferences and money habits that don’t necessarily translate to your life.
Just like a friend or a family member, a financial planner can be used as a sounding board for your ideas or to make sure that you’re on the right track. Consider meeting with a financial planner before major life milestones such as:
- Graduating college and entering the “real world”
- Getting a first job and navigating related financial decisions
- Getting married
- Buying a house
- Having a baby
- Switching jobs or careers
- Considering retirement.
There are many considerations around major life milestones, and it’s important to have someone to help weigh your options and guide you through the decision-making process.
But remember—You don’t have to be in any of the aforementioned stages to seek advice from a financial planner. Just as it’s useful to go to a general practitioner for a physical, it can still be worth meeting with a planner for some financial maintenance.
Is it worth it?
At Society of Grownups, we believe that if you come away feeling empowered to take action toward reaching your goals, the session is worth it. Having a personal financial planner is like having a personal trainer at the gym. You can certainly go to the gym and put in the work on your own, but a personal trainer can help make sure you’re doing it correctly, push you forward, and keep you accountable.
I’ve said my piece (and, btw, would love to hear yours). In the meantime, I need to go call my doctor.
Tyler is a CERTIFIED FINANCIAL PLANNER™ practitioner who believes financial education can empower people to reach their goals.
Any third-party resources or websites referenced above are not under our control. We cannot guarantee and are not responsible for the accuracy of the resources, websites, or any products or services available through such resources or websites. Society of Grownups does not give tax or legal advice. You are encouraged to seek advice from a tax or legal professional.