When To Hire A Financial Planner and Transform Your Financial Life

Understanding when to hire a financial planner is a key step in creating the financial life you desire. 

There are many resources out there in this day and age to educate yourself about your finances and how to manage your finances and portfolio successfully. 

You can find a myriad of books, websites, blogs, videos, and other information available to help you educate yourself on what might be best for you and your family. 

Trying to figure out all of this on your own can be overwhelming. Yet, for some, they may not feel ready to invest in a financial planner. 

So, with all of the information out there, when to hire a financial planner is an important question to answer.

What Is A Financial Planner? 

Financial planners, also known as financial advisors, are professionals who give their clients advice on personal finance, investing, and wealth management. 

When I talk about financial planners I am talking about CERTIFIED FINANCIAL PLANNERS™ also known as CFP’s®. Certified Financial Planner is the designation I myself hold. 

The CFP® designation is given by the Certified Financial Planner Board of Standards (CFP® Board) which establishes the required exams, qualifications, and continued education required for the certification. 

When To Hire A Financial Planner 

Many people believe that the right time to hire a financial planner is when you've come into a financial windfall or when you have a change in financial status. 

However, financial planners aren't only for the wealthy. 

A financial planner's skills are versatile and you don't have to be a millionaire to work successfully with one. 

Anyone can benefit from working with a financial planner. 

Here are the key things to consider if you're wondering if it's time to work with a financial advisor: 

How Much Free Time Do I Have? 

Do I have time to do the research myself? Or would my time and energy be better spent hiring someone with expertise to advise me on my financial situation? 

This can be different for everyone. Some people will feel that at this point in their financial lives it might make more sense to do their own research and make some financial moves themselves without advice.

However, for many, they will find that the time and energy involved in becoming educated about the nuances of financial planning is more than they're willing to invest now. So hiring a financial planner is a no-brainer. 

What Questions Do I Have? 

Financial planners can help you with many things including: 

• Putting together a retirement plan
• Creating an investment strategy
• Set up investment accounts and make investments for you
• Assess your current financial situation
• Develop future financial goals and benchmarks
• Make a plan to address key points like paying for college, taxes, and retirement
• Help understand and make choices about insurance
• Do estate planning
• Strategies to pay off loans
• Ways to generate more income
• Buying and selling a home

So the questions you have for a financial advisor and the degree of advice you're looking for presently may be the determining factor for when to hire a financial planner. 

It's one thing to make some initial decisions about how you're investing your retirement funds.

However, when you know you need to make a comprehensive financial plan, retirement plan, or estate plan it's wise to get professional advice to make sure you're making the choices that are in the best interest of you and your family's financial future. 

How To Hire A Financial Planner

Just like when you hire a financial therapist, it's essential to hire a financial planner you're comfortable with. This means considering a few things before you get started. 

Only hire a financial planner who has a professional certification so that you can be confident in their knowledge, ethics, and skills. 

Avoid financial planners who push you to make risky financial decisions, make you feel dumb for asking questions, or who refuse to explain every detail to you. 

Be prepared to ask questions when evaluating whether to hire a financial planner. This might include things like: 

• What's your experience with investments? 
• How long have you been a financial planner? 
• What type of clients do you normally work with? 
• How will I access you for questions? 
• How often can I communicate with you? 
• How and how often do you communicate with your clients? 
• What types of services do you provide?
• What's your investment philosophy? 
• Do you personally invest in the things that you recommend? 
• How does your compensation work? 

How Does Compensation Work?

The last question, in particular, is important to understand.

Possible ways that financial planners are paid include: 

• Subscription or retainer
• Commission
• Percentage of Assets invested
• Hourly Rate
• Fees by Service Type

There are pros and cons to each of the above.

For example, fee-based financial advisors may cost you more upfront and may charge a few thousand dollars a year for a comprehensive financial plan. Whereas other financial advisors make a percentage of the assets you invest, which would be a flat percentage of your total account balance. This can typically be .25% to 1% per year. 

It's also important to note that some financial advisors will receive incentives or bonuses for different investments they recommend and sell. This might mean things like trips or additional compensation for selling certain life insurance, annuities, or mutual funds. Although there's nothing inherently wrong with bonuses and they don't mean that the advisor is recommending a bad investment necessarily. However, this needs to be disclosed to clients so that they're aware of how it may be coloring the advice. 

Certified Financial Planners have an ethical obligation to disclose these potential conflicts of interest to you when they recommend an investment. During their certification, a CFP® commits to acting as a fiduciary for their clients. This means that they act in the best interest of their clients at all times. Although the CFP® board can't guarantee that individual's services, they can sanction a CFP® professionally if they fail to uphold this commitment. Regardless of whom you hire you should always get something in writing that states that they have a fiduciary obligation to you as their client. 

I would love to work with you as your financial planner. 

Would you like more 1 on 1 support? Then perhaps Therapy Informed Financial Planning is for the two of you. I invite you to schedule your free 30-minute discovery call today.

Wishing You Healthy Love and Money,

Ed Coambs

MBA, MA, MS, CFP®, CFT-I™, LMFT

HealthyLoveandMoney.com