Why You (Yes, You) Should Consider Getting A Financial Planner
You don't need to be married first. You don't need to have kids. You don't even need to have a bunch of money.
For the uninitiated, the words “financial planner” likely conjures up a whole slew of imagery assumed to be exclusive to the rich and responsible: Finger bowls. Rhubarb. Prenups. Tiny, tiny pickles that they insist on calling “cornichons.”
But having a professional advise you on what’s dumb and not-dumb when it comes to taking care of your finances isn’t, by any means, strictly reserved for people with so much money sitting around that of course they need help keeping an eye on it.
The role of a financial planner, generally speaking, is to provide guidance to help you reach your financial goals, whether that’s going to college, budgeting, saving for a house, retiring, paying off debt, or setting yourself up to rake in that sweet, sweet, passive income.
Their services can be applicable at virtually any point in your life, and who doesn’t need a money expert telling them what’s what? Before you set out to find the planner that’s right for your piggy bank, consider the following insights from three financial advisors on common misconceptions and mistakes they see with new customers.
It’s OK to be a lil' clueless.
“There’s a common misconception that you need to have your goals and objectives ready before you meet with an advisor,” says Chrissy Celaya, a certified financial planner and financial planning professional for Betterment.
Often times, the women she’s meeting with for the first time have no idea what they should be doing exactly, aside from vaguely knowing they should be saving responsibly for the future. It’s the job of both the financial planner and the client to work out what their top priorities and goals are, and to then create a plan to reach them successfully.
It’s OK if you’re not in “settle down” mode.
People seem to be under the impression that you need to have a family in order to create a financial plan, Celaya notes. “But you can absolutely begin planning at any stage of life. Saving for retirement, for example, is something that each person can do at an individual level, and if/when a partner comes into the picture, the plan can be updated to account for them,” she says.
It’s OK if you’re not rolling in it.
There’s no set financial threshold you need to cross before you can work with a financial planner. “Clients sometimes feel that while they know having a financial plan makes sense, they are unsure if they are a good fit because they may not have a lot saved just yet, or their excess cash flow may be limited,” Celaya says.
"But anyone ready to create a plan for their future should be working with a professional to be sure they are maximizing their strategy.”
Bring your curiosity to the table.
Marshay Clarke, licensed financial expert at Betterment, recommends having questions for your financial planner thought out ahead of time.
“Women may come into a meeting underestimating what they know. Evaluate what you want and come into your meeting with your advisor prepared, but always be open to suggestions,” she says.
When the plan is more defined and detailed, it makes it more difficult for any advisor to try to recommend something that may not be in your best interest.
And remember this, above all else: Your financial plan is yours. Clarke recommends not comparing what you are doing to your friends or family members. Other people’s needs, circumstances, risks and goals are not the same as yours.
Comparing your portfolio to your peers can trigger you to change your strategy when it’s not needed or beneficial, she notes.
But don’t fall for gimmicks.
“Financial planning is never ‘free.’ Usually, if someone tells you they will give you free financial advice, it’s attached to product sale, like life insurance or investments with high commission fees. This is still the most common way to dispense financial advice,” notes Pamela Capalad, CFP and founder of Brunch & Budget.
“If you want to work with someone who has minimal conflict of interest, look for ‘fee-only’ financial planners. A good way to find out is to ask the financial advisor how they are paid.”
And make sure they’re legit.
“Anyone can call themselves a financial advisor, so look for the Certified Financial Planner™ designation as a baseline. There are over 285,000 ‘financial advisors’ out there as of 2015, but only about 70,000 of them are CFP professionals.
Besides the insane amount of coursework required to become a CFP, we are required to do continuing education every two years, are held to a fiduciary standard (i.e. we have to put your best interests first), and abide by a code of ethics.
“Not all financial planners do the same thing or approach financial planning the same way, and beyond that, you need to make sure you like the person. This is an ongoing relationship where you will be sharing intimate details about your financial life,” she says.
“You don't have to work with your dad's financial planner if you don't connect with them.”
Words: Deena Drewis
Photos: Daria Kobayashi Ritch / GIPHY