Financial planning is not a set-it-and-forget-it activity. Rather, financial plans are ever-evolving based on your changing life circumstances. Your goals and priorities may shift as your career evolves and big changes like marriage, having a child, or getting a new job may warrant adjustments to your long-term plan.
It’s a common misconception that working with a financial advisor is only for those with significant wealth and many investments to manage. The reality is that leaning on the knowledge and experience of a professional is something anyone planning their financial future should consider.
Ask yourself: Do you find yourself questioning your finances? Maybe you’re spending a lot of time searching the Internet for answers? If the answer to those questions is “yes,” it might be time to find a financial planner to help guide your decisions. However, there could be instances where going a different route might be to your benefit, and it’s important to explore those cases, too.
Let’s take a look at some important considerations for working with a professional.
1. Do you have the time to spend on your investments?
There are many questions to ask yourself when deciding whether to work with a financial planner. One place to start is determining whether you have the time to manage finances on your own. For many, the idea of handling finances can be daunting, uninteresting, or just something you don’t want to spend your spare time doing. If this is the case for you, a financial planner can help. When you have a professional behind you, you can utilize their expertise and time to get answers quickly.
Life-changing events like retirement, marriage, divorce, children, and home purchases, usually create additional stress and take time. But these are the moments when a personal financial plan can make all the difference. Working with someone that is objective and has insights on a variety of financial topics can help you make the best decisions for yourself and your family.
Some of your goals may be simple and straightforward, like saving enough money to buy a car. But many of us want to work toward larger goals—such as living debt-free and saving for retirement—simultaneously. That’s where the help of a financial planner can be beneficial. They’ll evaluate your financial situation holistically and explain exactly what you can do to reach your goals.
If you manage your finances alone, you have to understand the entire picture. Consider your goals and how to reach them. Pinpoint your risks and configure strategies to avoid them. Be aware of the importance of planning for everything in advance, such as developing an estate plan. You’ll also need to monitor investments closely. People with little-to-no debts who are comfortable investing on their own, for example, can likely track their financial situation and set goals on their own, especially if they can maintain the discipline to not trade on emotion.
In addition, note that hiring a financial planner requires time. Take plenty of time to research and interview the right professionals, and keep in mind that once you have hired someone, you’ll need to continue meeting with them, and implementing and following up on your financial plan.
2. Can you commit to the realities of financial planning?
Another set of questions to ask yourself revolve around your readiness and willingness to commit to managing the complexities of financial planning.
Maybe you are a do-it-yourself investor who enjoys different aspects of personal finance. But as stated above, it takes time and a commitment to stay on track. There are a growing number of online resources and apps that will help, but they only take you so far and can be cumbersome to keep updated, especially as you may be trying to juggle multiple resources. And they won’t tell you if you missed something.
No one’s financial situation is the same and no challenge has a one-size-fits-all solution. Financial planners are paid to develop comprehensive strategies to approach your situation in a customized way. They will also help to keep you on track and hold you accountable for taking actions to help ensure your financial goals are achieved.
Generally speaking, if you’re looking for advice on a topic you’re unfamiliar with, you go to the experts. That should be the same when dealing with your personal finances.
While some people enjoy working on their investments, emotional discipline is an important factor in determining if you should go it alone. The past few years have seen significant ups and downs in the market, and you must be honest with yourself if you have the stomach to weather that volatility.
3. Are you achieving your financial goals?
Another common reason for the lack of a financial plan is the perceived expense in working with a financial planner to create one.
While there are a number of fee structures, fee-only advisors typically charge between 0.5 percent and 1.25 percent of the assets they manage. It’s vital to choose a financial professional that will provide a return on your investment.
Whether a financial planner is a fiduciary, like those at Emerj360, is also important, as fiduciaries are required by law to work in your best interest. Our team members don’t receive commissions or benefit from any sales of products.
Research has shown that few Americans have a written financial plan with defined financial goals. Those with a plan are not only more confident in reaching their goals, but they also form healthier money management habits for saving and investing.
Financial security and knowledge help reduce money stressors and provide peace of mind. Using a financial plan to know where you are going and how you are going to get to your financial goals is worth it.
As your financial situation becomes more complex—think about topics such as trust and estate planning, real estate structures, liability and risk management, business ownership, and succession planning—working with someone who can spot issues and act as your quarterback can be a considerable value.
Stay on Track
While you may feel comfortable managing your finances on your own now, this may change. It’s always important to check in on your financial situation regularly. As your personal life changes, your finances likely will too, and a financial planner may come in handy down the road. There’s never a bad time to ask for help.
