Long-term financial planning can prove confusing and overwhelming; most people shouldn’t attempt it alone. Your success at managing your finances will be enhanced by partnering with a professional who knows the intricacies of the field. A financial planner advises clients on how to save, invest, and grow their money, providing an overall picture of and roadmap to their fiscal future.
Why consider a financial planner?
A financial planner is paid to keep an educated, involved eye on the ball. As your life progresses, it’s likely your finances will become more complicated. If you plan to buy or upgrade your house, fund a college education or retire comfortably, it will be tremendously helpful and reassuring to have a trusted advisor in your corner. Beyond helping you plan for your financial future, a planner can help you stay on track by guiding your decision-making and urging to to stay disciplined.
What to look for in a financial planner
Seek out a financial planner who:
…holds a CFP (Certified Financial Planner) credential. This certification indicates that the individual has passed a rigorous test administered by the Certified Financial Planner Board of Standards and takes continuing classes on financial and ethical matters. While not required of a financial planner, it indicates his or her willingness to project a knowledgeable and upstanding reputation. You can check on the status and validity of a CFP credential.
…is a fiduciary. The National Association of Personal Financial Advisors offers:
Following the NAPFA Fiduciary Oath means I shall:
- Always act in good faith and with candor.
- Be proactive in disclosing any conflicts of interest that may impact a client.
- Not accept any referral fees or compensation contingent upon the purchase or sale of a financial product.
…charges fairly. It’s better to seek out a planner who charges a flat fee, a percentage (often 1%) of your annual assets, or an hourly rate, rather than one who receives commission from selling you financial products. A planner who bills hourly may be the best solution for those just dipping their toe into the financial planning pool. They’re likely in the process of building their business and, therefore be particularly eager to build their reputation by helping you build wealth.
…is the right “size” and “shape” for your situation. You want to be a “big frog” in your planner’s pond so he or she will make time to focus on your situation and answer your questions. Seek out a planner who has success working with clients like you; with similar income status and circumstances (number/age of children, tuition or retirement to save for…).
…is honest. Find out to whom you’ll be entrusting your financial future. Run a background check to determine if they’ve ever been convicted of a crime or been put under investigation by a regulatory body or investment-industry group. Ask for references from current clients whose financial circumstances are goals are similar to yours.
…is realistic. Look for sound advice rather than overblown claims. He or she should be focused on discovering the level of risk you’re willing to take and your short- and long-term goals. Pay particular attention to his or her overall strategy toward helping you achieve your goals, even when economic times are tough.
Finding a financial planner
As with many such personal decisions, seek out personal recommendations. Ask family, friends, co-workers who they’ve worked with. Also consult Garrett Planning Network.
While there’s a significant cost involved with hiring a professional financial planner, it’s easily justified in the peace of mind gained by knowing a savvy, trustworthy professional has your back.
Do you have a financial planner?
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