Financial Planning – What to Expect

That old saying, “you get what you pay for” can certainly apply when choosing a financial planner, but not always. Certainly, there are good financial planners and not so good financial planners. In any case, trusting in a reputable and experienced financial professional is much better than going it alone. Think about it, are you willing to do all the necessary research required to determine the best vehicle and then check the performance on a weekly or even monthly basis? Are you willing to develop a complete plan for a lifetime of earnings and then feel comfortable knowing that you’ll retire and never run out of money?

Types of Financial Planners

Financial Planners come in many flavors. Their credentials are typically based on the number of hours of coursework completed and exams they have passed;

  • Certified Financial Planner (CFP) signifies that the professional has passed a 10-hour professional exam, completed an approved course of study, and has at least three years of financial planning experience.
  • Chartered Financial Consultant (ChFC) this designation requires eight college-level courses that involve all aspects of financial planning plus 30 hours of continuing education every other year.
  • Certified Public Accountant/Personal Financial Specialist (CPA/PFS) this designation represents a certified public accountant that also has specialized financial training.
  • NAPFA-Registered Financial Advisor – this professional meets very strict educational and professional requirements to be a member of the National Association of Personal Financial Advisors.

As in any profession, there are individuals who may misrepresent their credentials. Always ask for proof of credentials and verify they are valid before offering any personal or sensitive information.

What to Expect

Calculate your net worth.

First things first. Your advisor is going to help you determine your net worth so that a basis can be established. You must know where you are financially to be able to plan where you’re going. Surprisingly, most people are unsure of their net worth until they are called upon to present it to a lender or mortgage company.

Determine your Needs

It is impossible to develop an investment strategy without having a specific final goal. Your advisor will ask many pointed questions to help determine how much money you will need to accumulate over your working lifetime in order to have sufficient funds to allow you to live according to your wishes rather than just getting by. Your advisor will build a foundation to work from using projected Social Security benefits and any pension resources that may be available.

Advice on Investments

Although you are ultimately responsible for selecting your investment vehicles, your advisor will offer the needed research so that an informed decision can be made on your part and keep you updated on the performance of your various accounts.

Determine Insurance Needs

Your life, health, disability, and long-term care insurance play an important part in financial planning. Your advisor will help you determine your needs predicated on a needs analysis that will be based on you and your family.

Coordinate your Retirement Income

The timing and distribution method from your retirement funds are very important. Knowing when to draw from various accounts will have a positive effect on available funds and your resulting tax liability. Your financial will be available to offer advice on making certain that you do not outlive your money.