In today’s do it yourself world it can be easy to feel that financial advice can be found by searching online. Much of that mentality is driven by the belief that financial planners are just for those that are rich. Debunking the myths about who really needs financial advisors and the best way to find the right advisor is an important discussion.
Let’s start with some of the myths such as the idea that financial advisors are only for the rich?
This myth is driven by the fact that a few advisors focus on the wealthy, but many have ways to help those with all types of financial advice regardless of their investment portfolio size. Advisors and planners all have unique experience and different types of clients. Whether you have $1,000 or $$1 million, there is an advisor that can help you.
Are financial planners only focused on helping people with investments?
Really good financial advisors and planners will help you with all aspects of your financial situation including budgeting, insurance, estate planning, and yes investing after developing a retirement plan. Looking for comprehensive advice is what you should be seeking in an advisor or planner. One that has knowledge of all of these areas is going to best equipped to help you through life’s journey.
What would you say to the person who thinks their finances are so simple they really don’t need any help?
We sometimes think our life is really simple because we are just not aware of the complexity that is really lurking out there. For example, working couples with children might be covered with life insurance but didn’t think about the added protection of disability insurance, a situation that is the more likely to occur. A financial planner helps people see all of life’s unexpected possibilities.
Can selecting a financial advisor or planner be difficult?
It will require effort to research and interview potential planners. Scheduling a meeting with 2 -3 planners to discuss your goals and their qualifications is vital. Determine if they have other clients similar to you and if they have qualifications in areas important to your situation. These interviews are valuable as you need to be able to relate with your advisor because in the end, you will need to trust them.
Are there other qualifications that one should look for in a planner or advisor?
Focusing your search on planners or advisors who are a fiduciary can help narrow the field. This means they have to disclose all conflicts of interest, compensation sources and legally must act in the best interest of their clients. One such designation is the Certified Financial Planner or CFP®.
If you have a financial planner can you relax and let them handle all the work?
Unfortunately, connecting with a financial planner is just the beginning, reaching your goals will require effort on your part to be successful. Financial planners and advisors can only give advice and make suggestions. Actions such as spending less and saving more, increasing 401k contributions, etc are ultimately the responsibility of the individual the advisor or planner is helping. If you don’t follow through on their suggestions you might not achieve the success you were hoping to achieve.