Should You Use a Financial Planner?

financial planner analysis
Is a Financial Planner worth it?

There are a lot of questions out there about whether using a financial planner for help with your finances is useful. You can use a CFP (certified financial planner) to assist you with not only investing, but understanding your whole financial portfolio. Although you can try a do-it-yourself approach, there are actually a lot of benefits to using a financial planner even if you are financially savvy. It is something that you have to decide for yourself and determine if it will add enough value to you, your life, and your portfolio that will more than cover their fees.

Who Benefits From a CFP?

You don’t necessarily need to have a high net worth, high income or a lot of money (i.e. high net worth) to get the benefits of a CFP. Anyone who is struggling with understanding their overall financial picture can truly benefit by having someone else help them get organized and get started. Additionally, it can also be helpful for people who are used to doing their own finances by having someone else provide a second set of eyes. There are many things that someone that isn’t involved in your day-to-day activity can see and give you input on.

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How are your finances looking?

A good planner should be able to understand all aspects of financial planning from investing, getting out of debt, increasing your income, how to retire early, or even how to achieve financial independence. It would be helpful to find a planner that knows your goals ahead of time and already has extensive experience in the particular area you need assistance with. There are a lot of planners that have a niche they specialize in. It would definitely be advantageous to identify your goals ahead of time and then pick an advisor based on your goals.

Some questions to answer before you pick or talk to a financial advisor:

  • Where do you think you are financially?
  • Do you have a retirement or savings goal?
  • What is your risk tolerance?
  • What is your earning potential? Do you have a side hustle that can bring in extra money?

Different Types of Fees

Certified Financial Planners can charge you in different ways. There are fee-only rates, hourly rates, a percentage of your investment portfolio, as well as a variety of other ways a financial planner can charge you for their services. You need to carefully do your due diligence to ensure that they are providing a value to you to meet your needs at a fee that you think is fair as it can impact your overall return on investment.

If you are looking for a  review on an hourly basis, you will probably pay about $200-300 per hour. You can do a quick Q&A review meeting (about 2 hours) or a full comprehensive review (range of $5,000 – $10,000). If you do a lot of your own financial planning, reviewing your budget and watching your investments, you most likely don’t need a full comprehensive review. If you do want a full review, you really need to ensure that the planner truly understands your goals and needs, otherwise the review will be a waste of time.

Always be cautious of any advisor that claims their services are free. From my own experience, as well as others I’ve talked to, those advisors are often investing your money in their firms funds. Those funds may not cost you anything to invest in them outright, but either the expenses are high or the cost to get out of them is high. As the saying goes, nothing in life is free. Be cautious with your money.

Are You a Fiduciary?

The best way to know if your financial planner is working in your best interest is to ask! Point blank ask them if they are fiduciary in all services they consult on. Once they answer “yes” to that question, they are held to that answer. A fiduciary is legally required to act in the best interest of you (the client), and always put your interests first. If there is a conflict of interest, they must disclose that to you.

If an advisor is not a fiduciary, they are able to recommend investments that may not be in your best interest. Additionally, you can ask them to tell you what a fiduciary is and see if you get a clear answer. The only right answer to “Are you a fiduciary?” is “Yes!

My Approach to CFP and Investing

I’ve been considering using a financial planner or tax advisor for awhile now. Although I’m a CPA (certified public accountant), I’m not an expert in all things finance related. I think having another set of eyes taking a look at my investing strategy for the future, as well as help with tax planning could benefit me going forward. I’ve always been an active learner, so having someone provide advice on these areas of my finances would help my do-it-yourself strategy going forward.

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Get your finances on the right track!

Fortunately, I’m in a good financial position to know I won’t retire broke like many Americans, but I’d like to make sure I do everything I can to ensure I retire very comfortably. I don’t want to be frugal because I have to, I want to be frugal because I want to and enjoy finding ways to have fun saving money. Therefore, finding a good financial planner that can help me evaluate my current financial situation and ensure I’m on the right path will help put me on the right path to achieve my goals and have a healthy financial future.

2 thoughts on “Should You Use a Financial Planner?

  1. I had never really thought about whether or not I should use a financial planner or not until I had kids. Things change so much when you have kids and you want to make sure all of your ducks are in a row I guess. I think that I am fairly money smart, but like you said with you being accountant, we are not all experts on everything money related. There is nothing wrong with having someone double check your finances in my opinion. Thanks for all of the great information, I think I will setup a meeting with a planner soon.

    1. It funny that a lot of people think that because I’m an accountant I am an expert in all things money related (taxes, stock market, investing strategies, etc.). I’m getting my finances in order to have someone take a look at them and make sure I’m on the right path. I think it’s kind of like writing, where you can read your own work many times and not find any mistakes, but if someone else takes a look, they can spot an error really quickly.

      It’s a goal of mine this year, so time to get started! Thanks for your comment! ~Jen

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