Navigating Your Financial Future: Is it Time to Hire a Financial Planner?
Have you wondered if you might benefit from hiring a financial planner? Or asked yourself what could a financial planner do for you and if the service is worth the cost? Financial planning pioneer Dick Wagner, JD. CFP® was known for saying, “Money is the most powerful secular force on the planet.” So, it’s no wonder that people are so discerning when it comes to allocating this finite resource. It is natural to be skeptical of the idea of seeking someone else’s opinions on your money habits. However, there are times when it becomes necessary to seek professional help. The job of a financial planner is to add so much value to your life that you stop worrying about the money and start thinking, “I couldn’t imagine going through life without you in my corner.”
In this article, we’ll discuss the key decision points that can help you identify whether now is the right time for you to hire a financial planner.
When Does It Make Sense to Hire a Financial Planner?
Many people will point to your net worth when telling you whether you need a financial planner. Some may say that you need to be a millionaire to get a financial planner because the stakes are higher once you cross that $1 million threshold. Others argue that you should start well before you become a millionaire because financial planners can advise you on effective savings strategies and help you establish sound financial hygiene that sets you up for success as your wealth increases.
In truth, there are four main signs that it may be time to hire a financial planner, and none of them has to do with the amount of dollars in your bank account.
First, the significance of your financial decisions becomes so great that you’re uncomfortable doing it by yourself. Think about it this way: a 10% mistake on $1 million is much different than a 10% mistake on $10,000. The greater the magnitude of your financial life, the harder it becomes to recover from errors or mistakes. With big decisions, it’s nice to have a second set of eyes to offer an outside opinion.
Second, it may be time to hire a financial planner when your life becomes so complicated that you don’t know what you don’t know. For instance, maybe you are contemplating starting a business or changing jobs. Maybe your family is growing and there are new challenges (such as saving for college) that you’ve never had to consider before. Or maybe your compensation has changed, and you’re receiving stock options that you’ve never heard of before. You can’t be an expert in all things, so now may be the time to hire an expert in these specific things.
Third, financial planners bring an objective viewpoint to an otherwise emotional topic. If you just feel stuck, or you find that emotions are getting in the way of meaningful change and progress, then a financial planner can help. It’s no secret that people attach very strong emotions to the concept of money: fear of loss, fear of regret, bias toward maintaining the status quo. The list goes on. If you can recognize these emotions in yourself, then having an expert in your corner can help you talk through these challenges and, eventually, take steps to overcome them.
Lastly, time is money. If you find that you are too busy to spend the time needed to manage everything yourself, it may be time to hire a financial planner. At a certain point in life, the hours that you would spend rebalancing your accounts, reviewing your estate plan, or shopping around for new insurance policies would be better spent elsewhere. Hiring a financial planner can free up the mental bandwidth to invest in yourself, spend time with family, and capitalize on your peak earnings potential. If you find that your financial life continues to be put on the backburner, hire a financial planner to act as your accountability partner and take some of those responsibilities off your plate.
How Do I Assess the Value of a Financial Planner?
Many financial professionals pride themselves on the “alpha” that they generate through their complicated, research-driven, and labor-intensive investment strategies. However, in truly powerful financial planning, investments are just one piece of the puzzle. The value of a great financial planner is more than just comparing the investment returns with fees. How would you quantify the value of a Roth conversion strategy, an effective estate plan, or a charitable giving strategy that will preserve your wealth over years, decades, or even generations?
Taking this one step further, at Yeske Buie, we would go as far as saying that none of the research and number crunching matters if it’s not personal, relatable, and aligned with who you are and what matters to you. We believe that a financial planner should start their relationship with their Clients with a discovery process. During this process, a financial planner should endeavor to uncover your greatest hopes and dreams, and strive to learn about what matters to you most – the people in your life, the organizations that speak to your heart, the activities in which you like to participate, and any and everything else you want to share with us. With everything a financial planner learns from your exploration together, they then get to work in creating an initial financial plan that aligns with the core of who you are – where you’ve been, where you are, and where you’re going.
And of course, the presentation of an initial financial plan isn’t the end of the process – financial planning is an ongoing journey. Through a continued discovery process and the wealth of experience that financial planners gain by working with their Clients, a financial planner should also be adept at helping you navigate big life events such as marriage, growing your family, starting a business, transitioning into retirement, and goal setting. They should be serve as a thinking partner and someone who is with you on your life and financial journey every step of the way.
What else should you look for in a financial planner? Competent, ethical financial planners will put your interests above their own – ask a financial planner about their fiduciary duty (and make sure he or she is a CFP® Professional!). They will remain educated and keep up to date on current laws and regulations that affect the tax code, retirement contributions, estate planning, and more. And they don’t do it alone! Quality financial planners can count on a network of other financial professionals, including accountants, estate attorneys, insurance brokers, mediators, and financial counselors.
With all of this said, it should be noted that a financial planner is only as effective as the information they have to work with. Financial planning is a collaborative process that requires you as the Client to explore your relationship with money, identify what you want to get out of life, and communicate openly with your financial planner anytime you disagree or have questions. The value of a financial planner may be limited if you are not comfortable sharing your financial information, communicating values and goals, or speaking up when you disagree with your financial planner’s advice or recommendations.
The Yeske Buie Financial Planning Team
Truth be told, not everyone needs a financial planner. Not even all wealthy people need financial planners! Often, the first step is to seek out financial education before seeking financial planning. There is plenty of free information out there for you to navigate the landscape of personal finance on your own. However, if you’re finding yourself spending hours googling legal jargon just to understand your own will, the value of an investment, or whether your insurance company will cover a particular loss, then it might be time to hire a professional.
Financial planners do the research for a living, so you don’t have to. Planners have the benefit of looking at hundreds of financial situations, comparing your situation with others who are just like you. The true benefit of a financial planner is the wisdom of hundreds of lives lived all at once. Couple this with a deep understanding of your unique values, goals, and circumstances, and you’ll come to see why financial planning can truly be transformational.
If any of this has resonated with you, please reach out to us at AFP@YeBu.com. We’re good people to think with, and we’d love to have a conversation with you about whether now is the right time for you to hire a financial planner.