Do you associate the notion of a financial planner with wealthy, high net worth individuals?
While it’s true that the rich and famous almost invariably have financial planners, it doesn’t necessarily work the other way around. You don’t need to be a millionaire to have someone manage your money. What you do need is a motivation to make the most of what you have through smart planning and budgeting and investment advice. Whatever your income level, you can find a financial advisor who can guide you to meet your goals.
Signs You May Need a Financial Planner
You might have received a large inheritance and want to make sure it doesn’t slip through your fingers. Suddenly, you have big decisions to make with large amounts of money, and your situation has changed overnight.
You might want to start saving retirement, but don’t feel the numbers really fit, or maybe you are late in the game to retirement savings and want to catch up. Perhaps you want to retire early and need some expert advice on how to pursue your dreams.
Alternatively, you may feel your finances have become too complex for you to handle alone if you have several streams of income, multiple loans and many expenses.
One of the first steps is to identify what kind of financial planner you need. Some people are comfortable with a regular tax accountant to start out with, while others want a full range of services. Think about what you want to achieve with your money, and browse through selections of advisors with expertise in relevant areas. You can find advisers who specialize in retirement or business planning. In addition, look for advisors who deal with certain varieties and quantities of assets. You can find advisors whose clients are regular homeowners or advisors like Patrick Dwyer of Merrill Lynch who deals with high net worth individuals and families.
Meeting with Your Financial Advisor
Meeting with your financial advisor face to face helps to foster a connection and enable you to decide whether the advisor in question is the right person for you. The financial planner should ask for information that will provide a full picture of your current situation. You should provide your last two tax returns, documents pertaining to assets, insurance policies and full income information. He or she should discuss with you any short and long-term financial goals and decide how to achieve them. Depending on his or her approach, the advisor will discuss budgeting, saving and investments.
The desire to make lucrative investments is the main reason many people decide to enlist the services of a financial advisor. Many advisors recommend a diversified portfolio, while others focus on specific types of investment, such as real estate, stocks or hard assets. Discuss with your advisor what investments vehicles you are the most comfortable with. In addition to the home you may own, you may want a portfolio of stocks or to invest in precious metals.
Questions You Should Ask
One way to decide whether a particular advisor is for you is based on the question he or she asks you, but you should also have a list of questions to ask to determine if you want to work with the advisor. It is important to know how the planner charges, whether it will be though fees or commission. The advantage of having an advisor charge by commission is that he or she will be motivated to provide maximum returns, although a more conservative approach may be for a fee-based plan. Also, ask the advisor if you will be dealing directly with him or her or whether they work for a team. It may be confusing to expect to reach the person you interviewed and be told that you have to meet with someone else. However, many people prefer to deal with established firms, even if that means not dealing with the same person every time.
You should ask to see a sample financial plan so you have an idea of what the planner can do for you. A sample plan can tell you much about what to expect from your own plan. In addition, find out how often the financial planner intends to meet with you. Some advisors sit down with clients on an annual basis, whereas others get together quarterly. You also should find out how you can get day-to-day questions answered quickly.
Shop Around and Investigate
Before you make your final decision on which financial advisor to use, make sure you have examined your options sufficiently and have found a good fit. It is easier to select a financial advisor in the early stages than to change hands once you get started. Ask for recommendations from family and friends or look on LinkedIn for reviews of advisors. Take the chemistry during the meeting into account and ask yourself honestly if you feel you can work with this person and want him and her to assist you in making vital decisions about your future. A lot is riding on your choice of financial advisor, so choose with care and go with your gut feeling.