A financial planner may sound like a professional whose job function is not understood, or out of reach for the average person - especially for a young professional who hasn’t had the time to save much money.
Historically, young professionals are pushed out of working with financial planners because they don’t have assets to manage - but today is a whole new world.
Oftentimes, young professionals don’t even consider hiring a financial planner, because what will a planner be doing for them? Your situation isn’t that complicated and the internet has everything you need to know.
Additionally, the value of a financial planner is hard to know in terms of “hard dollars”. In other words, I occasionally get asked “how will I know that your services are worth it for me?”. To which I say, “it depends!”.
There is no clear answer like “if you hire me, I will save you (or make you) $5,000 but I will only cost you $2,400”. It is not that clear cut and everybody has a different situation which makes that impossible for me to honestly answer.
AND, that is not my value as a financial planner. I am offering an ongoing service, not just a one time money saving / money making product. My value is long-term in nature and helps to implement behaviors and plant seeds for a financially secure future.
So, how can you tell if my services are worth it? It depends on what you value. Here are some intangible benefits of hiring me (or another planner) that come along with my services.
Before I start giving advice, I have to start by knowing where you currently stand with your finances. And the only way to do that is to collect all the information.
Taking some time to dig up any old accounts that may have dropped from your mind and get a pulse of everything you own and owe is important. This will help to give you a feel for what you’ve accomplished up to this point, as well as to plan for what you can accomplish in the future.
Sometimes it is a headache to keep track of everything - old retirement accounts, small gifts from parents many years ago, insurance policies or other documents you need to keep track of…
Collecting all this information, consolidating it into a cohesive plan and coming up with a strategy to grow all your assets is a benefit of having a planner. This simplifies your financial life and brings clarity to it.
Along with my comments above, there is an education piece to my services. This is huge for young professionals! You have a long career ahead of you and assuming that I’ll be your financial planner through your whole career would be naive of me. So, part of my process is educating along the way so that if there is a time where it makes sense to part ways, you’ll have a much better understanding of your situation.
Teach a person to fish!
Education in your finances may be one of your best investments early in your career so you know how to manage money and what you need to do to work toward financial independence.
In my opening, I talked about having all the information available to you via the internet. But, a financial planner’s job is not to just give you broad information about money - it is to understand all the available information, make it relevant to your situation, and break it down into easily understood advice with actionable steps.
This helps to build trust through educating, and gives you an actual plan to start moving forward and making progress - instead of having to decipher this all yourself from a multitude of questionable internet “professionals” that may just add stress to you.
Building on the above, once you understand what you need to do and create an action plan, the next step is to implement the actions.
This is why I only offer an ongoing financial planning engagement - because the advice and education is worthless without taking any action.
The accountability of my service has regular check-ins, ongoing advice, and sometime hands on implementation for you! But at the end of the day, knowing somebody is there to watch and motivate you, and occasionally ask “did you complete this?” helps to keep you accountable and on track with your finances.
Where do you want to be with your finances? It can be hard to be forward thinking with your finances when all you can think about is climbing out of debt or just trying to spend less than you make.
Being proactive and having a vision for where you want to go can help to put a plan in place. Instead of being reactive like “I want to buy a house when my lease ends this month, what can I do?” I help you to be proactive like “I want to buy a house in a couple years, how do we start planning for that?”.
This is just a small example, but goes along with a cadence of meetings / discussions with me throughout the year to make sure we are staying on top of and planning for what you want to happen in the coming years.
Many of my clients also hear from me during important moments in the year like open enrollment to think through what the best plan and benefits will be for the upcoming year, how to minimize their tax bill at year-end, creating goals around savings at the beginning of the year and tracking the progress throughout the year, etc.
Having some intention around your finances not only puts you in a better position for success, but it helps to give you some peace of mind knowing the steps you are taking to be financially responsible and that all your hard work is bringing in results.
Making money is one thing, but converting that into savings and wealth is another beast that can take a lot of expertise.
I like to play a few roles as a financial planner, largely: educator, advice giver and thought partner. Being objective allows me to hold that third title of thought partner, which I find is helpful for my clients.
I don’t claim to have all the answers. Everybody is unique and has their own feelings and ideas when it comes to money, and I would never shame anybody for that. Having the ability to understand where you are coming from and keep an open mind allows me to be somebody you can bounce ideas off of - and get my opinion without feeling like I have a hidden agenda.
I have a lot of opinions from my own research and experiences of being in the financial world everyday. But, I am also willing to admit that I don’t know everything and others may feel a different way than me!
Many times, I have clients talk about speculative investments like Bitcoin, what next steps they should take for their career, what the best “at-home” exercise equipment they should buy…
Having 'no horse in the race' allows me to give an outside perspective or opinion for you to consider. Many large life decisions ultimately have an impact on your finances whether directly or indirectly, and I believe that I am somebody who can pick up on and discuss any blind spots you may have when it comes to finances and taxes.
To sum it up, instead of telling you what to do (as if my advice is law), I work in partnership with you to make your goals possible.
Additionally, when your buddy Dom from college wants to sell you some life insurance, I can give you an objective opinion and be used as a scapegoat so that you can put Dom down gently :)
Financial planning is no longer for the wealthy now that there is a focus on planning as opposed to investment management. There will inevitably be professionals that do many different things, and due to the nature of the all-encompassing term “financial advisor”, it is hard to distinguish who does what.
That is why I like to focus my title on financial planner. My planning has services included that are more than just selling products - it has a focus around teaching and guiding my clients to start understanding their money and feeling more empowered.
So, if you are considering hiring a financial planner, start thinking about what you want to get from it. If you just want somebody to put you into an investment plan, a robo-advisor will be much cheaper. If you want some insurance products, a one time exchange with an insurance salesperson will do the job.
But, if you want to work directly with a human and start understanding your money and making a plan to get to where you want to go, I suggest finding a fee-only financial planner.