Whatever stage you have reached in your financial journey, you’re likely to have questions from time to time. From buying your first home through to planning for your retirement, getting your finances organised can be a little daunting. Everyone you know is likely to have an opinion when you ask a financial question, but does that mean that you’re getting the right answers?
Fortunately, financial planners are ready to help. Here we’ll explore the role of the financial planner to help you determine if you need one.
What is a Financial Planner?
Financial planners are a type of financial advisor, and their primary role is to make projections to help you formulate a plan to achieve your financial goals. A financial planner gathers financial statements and other information to consider “what if” scenarios which help you to plan for the future.
These types of projections can help you to determine a number of issues, such as:
- How much you should save
- What investments you should make
- Your income level in retirement
- When you could retire
- The life insurance policies you may need
- How you can protect your savings
- Whether you should put money into your pension or pay off your mortgage.
Some of these issues are not easy to consider; looking into the future can be daunting. However, a financial planner can take the emotion out of these issues to help you make informed decisions.
The Benefits of Financial Planners
There are a number of benefits associated with using a financial planner. These include:
- Professional Answers to Your Questions: As discussed above, trying to get the right answers to your financial queries can be tricky, but a financial planner can provide you with professional advice and guidance. This means that you no longer need to rely on the dodgy details provided by your Uncle at family gatherings.
- Help Focus on Your Financial Goals: Most people can feel overwhelmed by their finances and being clear on your goals is a first step. Financial planners can help you to concentrate on the most important or urgent aspects, so you can start developing a solid financial future.
- Gain Access to Exclusive Insurance Deals and Stocks: According to SensibleMoney.com , over 90% of the 350,000 financial planners in the USA receive commissions from the products they sell. In the UK there are other subtle differences between advisers. In short, this means that you need to ensure that your financial planner puts your interests first, but he or she can provide access to some exclusive deals and offers that are not available to the general public.
- Specialist Expertise: Some financial planners specialise in specific areas. So, if you’re concerned about retirement, you can use a financial planner who focuses on retirement plans. However, if you’re more concerned about wealth building, you need a financial planner who focuses on savings plans.
As you can see, a financial planner can offer some great benefits for people in all financial situations. Regardless of what stage you’re at in your financial journey, a financial planner can help you work towards your goals.
The Types of Financial Planner
Fortunately, there are different types of financial planners to help fit your circumstances, budget, and preferences. These include:
In-Person, Traditional Financial Planners:
When you think about a financial planner, you’re likely to imagine an in-person traditional expert. In-person planners provide one on one advice, which is ideal for those with a complicated financial situation. Traditional financial planners typically have accreditation, indicating stringent formal training and assessment.
Unfortunately, you do need to pay for this expertise. You may be expected to pay by the task or by the hour. However, some financial planners charge based on the investment portfolio size. In some cases, you will need a substantial account balance before a firm will represent you.
Before you start working with a traditional financial planner, you need to know whether the person acts as a fiduciary. This means that they are under an obligation to put the best interests of the client first. Otherwise, you may find that the recommendations for products and services are based on commission fees and other benefits for the adviser rather than yourself.
If you’re just getting to grips with your finances, then a Robo advisor may provide adequate access to financial planning tools and investment options. Robo advisors are designed to build and manage investments and other financial planning tasks for a small fee. This is typically 0.25% of the account balance or less.
The investment mixes are determined by algorithms and can be automatically adjusted as needed. Basic accounts typically only require modest initial investment.
The easy entry, low-cost nature of the Robo adviser means that the barriers for working on your financial goals are reduced. So, you might consider starting off using a robo adviser, and bring in a human adviser later if your situation becomes more complex.
There are also a number of online services that provide a combination of access to human advisors and computer-driven investment management. In most cases, you will have a dedicated financial planner, but you’ll be meeting via video conference or email rather than in person.
These types of services are a middle ground, typically more costly compared to using a robo advisor, but less than using a traditional financial planner.
So, Do You Need a Financial Planner?
To achieve any degree of financial stability or freedom, you need to have financial goals, but it can be a real challenge to prioritise or even set goals without help. A financial planner can help you to assess your financial situation and understand the best way of working towards achieving your goals.
So, if you’re serious about getting a grasp of your finances and setting some financial goals, then you should give getting a financial planner some serious consideration. Whether you choose to use a robo advisor, traditional financial planner, or an online service, these experts can help you work towards achieving your financial goals.