What is a Financial Planner?

A financial planner is an expert that can help you plan your finances. They are professionals hired to examine and help map out financial goals. 

Some financial decisions that a financial planner can help with are:

  • Assets allocation
  • Retirement plans
  • Property purchasing
  • Children Education plans
  • Insurance 
  • Investment management
  • Tax planning
  • Risk management
  • Debt payment

For a financial planner to gauge the best plans for a client, they will need to assess the following:

  • Client’s financial goals
  • Financial risk tolerance
  • Income stability
  • Life stage

Should You Hire a Financial Planner?

People have different levels of financial needs and problems. Handling certain situations without a financial planner is, of course, possible. But, there are certain circumstances when seeking help becomes inevitable.

Here are scenarios that would affect someone’s financial situation. These situations show when one could use the expertise of a financial planner:

A significant increase in income due to a new job or a promotion. To ensure the best management for the new source of income, hire a financial planner. They will help adjust your budget and divide money where it best benefits you and your family.

Getting married. Excluding wedding expenses, a soon-to-be-married couple has financial matters to discuss. This includes dealing with savings, expenses, insurance, assets, and especially existing debts.

Hiring a financial planner will simplify the process. It would also help stabilize the economic relationship of the couple.

Getting divorced. This is a familiar situation that needs a financial planner’s help. They will handle discussions on child support and the division of assets.

Unexpected increase in wealth. This could happen when one wins the lottery or receives an inheritance from your family. This situation can become overwhelming for most people. If not handled right, it would lead to mismanagement. 

It is best to seek a financial planner’s help in allocating your newfound wealth. 

How to Choose a Financial Planner

It is crucial to assess the credibility of the financial planner you intend to hire. After all, it is your financial stability on the line.

Know if a particular financial advisor is up to par with the standards of a true financial planner. Do this by remembering to ask about these two critical things:

What are your credentials?

Available information and technology make anyone claim to be a financial expert.

To check credibility, look for at least one of these certifications to:

CFP (Certified Financial Planner). This title is only given to CFP board passers that completed a series of exams. They have to pass annual educational programs as a way to renew certification and skills. It’s handled and awarded by the Certified Financial Planner Board of Standards, Inc.

CPA (Certified Public Accountant). If you need advice for tax-related concerns, then a planner with a CPA background is the best choice for you.

CFA (Chartered Financial Analyst). These types of financial planners are usually fit for corporate financial planning roles. If you are looking for a financial planner for a corporation, opt for someone with a CFA.

How do you charge your service?

Ensure that you know how your financial planner charges for their services.

There are several ways that financial planners seek compensation:

  • Hourly rates
  • Per Plan Charging
  • Retainer’s Fee
  • Commissions from recommended product purchases
  • Percentage of assets managed

There are pros and cons to any compensation packages. It all depends on the service you need. Discuss it in detail with your financial planner before agreeing to anything.

Other important questions to ask your prospective financial planner are the following:

  • What services do you offer?
  • Among those services, what is your area of expertise?
  • Will you serve as my fiduciary?
  • How will we resolve conflicts?