Broker Check

Financial Planning: Who Needs It?

| October 22, 2021

No matter how much money you make, the earlier and more completely you master money in your life, the more likely you are to achieve what everyone wants: a financially comfortable today and a financially secure tomorrow.

Mastering money in our society can be a challenging task. Making sound financial decisions requires knowledge of investments, taxes, risk management, estate planning, pension benefits, and other areas—coupled with an understanding of how these elements interrelate.

Who Masters Money?

When it comes to mastering money, those who are successful at it are more likely to have committed their financial goals to writing. Money “masters” have a destination that results in a more organized and concerted approach to financial problem solving. After all, when you don’t know where you are going, any path will take you somewhere. With a financial destination, you can select the paths that will lead you to your goals.

How to Choose an Advisor

Some people work with financial service professionals, insurance professionals, attorneys, and accountants. These specialized consultants will work with you to define your goals, helping to ensure that your chosen destination becomes the focus of your financial strategy.

Here are some of the things to look for to determine if a financial professional is suitable for you:

1.  What are the individual’s credentials? Some common designations are:

  • CFP (Certified Financial Planner): granted by the Certified Financial Planner Board of Standards in Denver, CO. Emphasizes broad background in financial planning.
  • ChFC (Chartered Financial Consultant): granted by the American College in Bryn Mawr, PA; emphasis tilted toward insurance issues. 
  • CLU (Chartered Life Underwriter): insurance industry designation signifying more advanced insurance knowledge. 
  • APFS (Accredited Personal Financial Specialist): sponsored by the American Institute of Certified Public Accountants; holders have expanded their expertise into areas of personal finance. 
  • RIA (Registered Investment Advisor): signifies registration with the Securities and Exchange Commission (SEC), and is required by law for anyone giving investment advice. While credentials don’t speak to an individual’s personal integrity, they do imply that the holder has the advanced knowledge, commitment to continuing education, and experience expected of a professional.

2.  How long has the professional been in business? While long-term experience may not be all that important for some aspects of financial planning, experience through up and down markets is essential if you’re seeking investment advice.

3.  In what areas does the professional feel most at home? Most will have an area of specialization beyond their general broad-based knowledge. It is important to find out if the person’s expertise matches the areas in which you need help.

4.  What is his or her professional network? A reputable financial professional knows his or her limitations and should be willing to enlist expert advice if necessary.

5.  How is the professional compensated? Most work on a fee-only basis, commission-only basis, or combination fee and commission. No one method is necessarily better than another. What is important is that you understand and feel comfortable with the manner in which the professional is compensated.

6.  What is your “gut” reaction to this person? Will you be able to share your hopes and dreams, as well as your personal financial information with this individual? Knowledge and experience are extremely important, but you must decide if this is a person you can trust.

Staying on Course

You may be tempted to think that once you find a financial professional, and your financial strategy is worked out, the picture is complete. However, any “plan” you make for the future is really just the beginning—the foundation of a continuing process. Your needs, wants, and financial goals will likely change as time passes, and there will be economic changes and tax law changes as well.

It helps to think of planning as a continuous process, like navigating a sailboat. Staying on course does not require constant attention, but does require periodic monitoring.

If you choose your financial professional carefully, you will have a trusted ally to help you make mid-course corrections according to the changing conditions. In the process, you will be on your way toward becoming more financially comfortable today, and more financially secure tomorrow.