There are quite a few misconceptions when it comes to working with a financial planner. For one, you might think that financial planners only work with the rich. Or, you may expect that they’re just developing investment strategies for clients. However, financial planners are actually versatile in their offerings and, no, you don’t already need to have millions of dollars to work with one.
Anyone can benefit from speaking with a financial planner. And in fact, getting advice from a financial planner sooner rather than later can make a huge difference.
Select asked John Loper, a CFP and Managing Director of Professional Practice at the CFP Board, to break down what you should know about working with a financial planner.
What can a financial planner help with?
According to Loper, certified financial planners (CFP’s, for short) can typically help with a variety of concerns.
“CFP’s can help people who need a strategy to pay off loans or need ways to generate income,” he said. “They can also help young families settling down, mid-life individuals who need help maximizing their retirement savings and those who need assistance with tax planning and estate planning.”
But their services don’t stop there. Here are some other areas where a certified financial planner can be of assistance:
- Income management and debt
- Guidance on student loans, mortgages and auto loans
- Retirement planning strategies
- Understanding Social Security benefits and when to take it
- Veteran benefits
- Opening IRA’s
- Risk exposure and insurance planning
- Long-term care insurance
- Investment recommendations
- Proper asset allocation
- Rebalancing your portfolio
- Saving for your children’s future
- Developing college funding strategies
- Estate planning
- Minimizing your tax bill
Loper also asserts that CFP’s can play a role in providing guidance with what’s known as “triggering events,” — events that can result in significant changes in income or wealth. Triggering events can include, but aren’t limited to, large inheritances, divorce and death.
There are a few ways to go about finding a financial planner. You might want to start by finding out if your employer offers financial planning services as an employee benefit. This could be a good, non-intimidating place to start working with a financial professional. Plus, depending on the company’s terms, the service may be complimentary through your employer.
If you already have a specific issue that you need help with, you can try searching for a financial planner using Zoe Financial, which can match you with a list of professionals who specialize in your concerns.
Another option is to use PlannerSearch.org to find a professional in your state. It’ll give you a list of CFP’s near you, and you can also filter by specialties such as employee benefits, getting married, getting divorced, bankruptcy, home buying and more.
When should you think about speaking to a financial planner?
Working with a financial planner can be a big and exciting step. Although, not everyone needs to have an ongoing, regular relationship with a financial planner, there are some instances where it might make sense to get a professional’s input.
“I don’t know that everyone should hire a financial advisor, but everyone could benefit from consulting one upfront to see which services may apply to them,” Loper said. “Most planners offer free consults. Until you actually sit down and have an initial conversation you’re just guessing what your next step should be.”
You need a new perspective on your finances
Maybe you already have an idea of what your next move should be, or how to best manage the rest of your finances. Or, maybe money management just feels really confusing and overwhelming. If you aren’t totally confident or wonder if there are better next steps for you to take, you might consider consulting a financial planner. Their expertise may be able to provide an option you haven’t yet considered. After taking a bird’s eye view of your financial profile they may be able to tell you if there’s something else you should be prioritizing.
Loper does caution, however, that sometimes the best next move a person can make with their finances is to do nothing and maintain their current actions. A CFP would be able to clarify if this is really the best thing for their client.
A triggering event has occurred or will occur soon
Triggering events, such as marriage, death, divorce and receiving a large inheritance, can have a large impact on how you manage your money — and sometimes even the progress you’re making toward your financial goals.
As these events occur, you may think about getting a professional’s opinion on how an influx or a decrease in your wealth can impact what your next financial move should be. Plus, according to Loper, as you move through different phases of life, you start to focus on different areas of your finances.
For example, maybe you go through a divorce right as your kids are about to begin college — a financial planner can help you create a plan for funding your kid’s tuition.
You’re nearing retirement
Of course, you can also see a financial planner if you need help getting started with saving for retirement. But if you’re going to retire soon, it could be helpful to check in with a professional to make a plan for how you’re going to make your money last the rest of your life. This can feel like a weight off your shoulders even if you’ve been using a robo-advisor like Wealthfront or Betterment to make investments that are just right for your risk tolerance and goals. A CFP can help you better analyze your lifestyle expenses and your savings so you can decide on a safe amount of money to withdraw each year.
A financial planner can also help you spot any holes in your retirement plan. Like, maybe you’ll need to save a little extra money — which could mean having to remain in the workforce for an extra few years.
Bottom line
While not everyone needs an ongoing relationship with a certified financial planner, pretty much everyone can benefit from having a consultation — and some initial input — with a CFP. Especially since there are a variety of concerns that a financial professional can assist with.