Is a Financial Planner Right for You?
By Amber Watson
Throughout your life you have always been told to save for retirement. You probably experienced, like most everyone, the ups and downs of the market. However, many people were told that it didn’t matter, it was for retirement and “not to worry, it will come back; it always does.”
Well, you have finally reached that new era in your life. Maybe retirement is just around the corner, or maybe you are already retired. Either way, you have lots of new concerns to take into consideration. Similar to the doctors you have had over your lifetime; the pediatrician when you were a child, the family doctor that was there when you needed them in the early years, and now as you switch gears, you have probably transitioned to an internal medicine physician or numerous specialists for very specific reasons.
Financial planners are very similar to that physician or specialist. They typically take a look at the entire medical (well, financial in this case) picture and have a team of CPAs, estate planning attorneys, and investment advisors all under one roof examining your entire financial picture ensuring that each piece of the puzzle is working cohesively to meet your goals. They will meet with you a few times a year, keep you informed on any major changes that could impact you or your loved ones, invite you out to events where you have the opportunity to interact with other clients, and be proactive in their relationship with their clients.
Typically a little more conservative in nature, financial planners tend to focus on how to protect your current assets, distribute them to you tax efficiently, and how to structure your assets to leave them to your heirs in the most tax efficient manner after you have passed. After all, at the end of the day, it’s not how much you make, it’s about how much you keep.
A planner will not be afraid to have a conversation about such things as long-term care, life insurance, or annuities. They come prepared with their vast knowledge about the world of investments and how it may or may not be appropriate for your specific plan. They will typically present you with multiple solutions to solve a problem and be very transparent about the pros and cons of each decision you make. Financial planners are held to high standards and try to keep the clients best interest at the forefront of any recommendation.
What about fees? Most planners will charge a flat fee to develop a financial plan or, if they are responsible for implementing the plan, many planners will charge a percentage of the assets they manage. The fee probably ranges anywhere from .5% to 2% depending on the size of the assets under management. You have probably been exposed to advisors who work by commission or charge per transaction. There is nothing wrong with that type of environment. However, it is different. Being charged a fee for the assets under management will usually come out as a line item on your statement. For better, or worse, this is probably the first time you will see your fee as a line item.
However, why pay someone to do it when you can do it yourself? Choosing an advisor is a difficult thing and if you are going to make money, or lose money, why not be on your own terms? Or maybe you’ve had a bad experience with a previous advisor or investment firm.
There is a wealth of information available nowadays to enable investors to make their own informed decisions. If researching the markets on a daily basis and doing the analysis on investments is something that is of interest to you and you enjoy making your own decisions, there is nothing wrong with creating your own plan and managing your own investments.
Again, it is about HAVING a plan in the first place. What we find is a true financial plan that encompasses the investments, the taxes, and the Estate implications can be very overwhelming and investors tend to get “stuck” and therefore never finish creating their plan or they miss a very important piece of the puzzle to pull everything together. We frequently use the old adage “Paralysis by Analysis” – investors are SO overwhelmed with the amount of information out there, they get overwhelmed and do nothing. From our perspective, if you fail to plan, you plan to fail.
With so many new concerns coming to the forefront of this new phase in life, you may want to consider a second opinion from a professional that will look at the big picture and pull everything together in one simple, cohesive, verifiable plan.
Just like your doctor can help prevent and cure illnesses, a financial planner helps prevent and cure ills in your financial plan. Don’t wait until it’s too late to get a financial check up!
Amber Watson is a financial planner and retirement expert at Prostatis Financial Advisors Group, LLC in North Bethesda, Maryland. She is available for financial consultations and can contacted at (301) 468-1040.