The Advantages of Employing a Financial Planner

By Kelly Hodges
Now that we’ve discussed why a financial planner should be part of your financial plan (read more here), and how to go about choosing a financial planner that’s right for you (read more here), it’s time to delve into the specific returns you will gain from this investment of your time and money.   Although there are more, here are the top 6 advantages of employing a financial planner:


1.  You will be forced to take an in depth look at your finances.  You can’t just show up for your appointment with your brand new financial planner and expect miracles to happen.  You must come prepared with information, and the more detailed the better.  How much do you earn each year?  How much of that do you bring home?  Does your employer sponsor a retirement account?  Is there a match?  Do you contribute?  How much money do you have saved, invested, or in retirement accounts?  How much are you spending on insurance; car, home, umbrella, life?  What is your coverage?  What is your monthly car payment, rent or mortgage payment, student loan payment?  Do you have credit card debt?  How much do you spend on cable, internet, cell phone bills?  What are the monthly grocery expenses?  Where is the rest of your money going- restaurants, concert tickets, your stamp collection, the latest video games, etc.?  If you’re like most people, this is not an exciting topic to tackle on your own, so you probably won’t.  However, if your financial planner sends you a form requesting all this information (and more), you will be forced to sit down and figure it out prior to your meeting.  Although a painstaking process, it is extremely valuable and will likely be a big eye opener to discover where all your money is actually going.

2.  You will be forced to set personal goals.  No one can set financial goals until they first sort out what their personal goals are.  What do you ultimately want to do with your life?  I know this seems philosophical for an advantage of a financial planner, but most people don’t take enough time to step back and look at the big picture of their life, because they are so caught up in the day to day.  This is an opportunity to figure out what’s most important to you- do you want to quit your day job so you can pursue your passion for acting?  Do you want to retire at 45 and travel the world?  Do you want to upgrade to a bigger house in a better school district for your kids?

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3.   You will ensure your financial goals are aligned with your personal goals.  Once you sort out what your ultimate goals are for your life, you can then tailor your financial plans to help ensure you reach those goals.  Your financial planner will make you a detailed roadmap of what you must be doing today to achieve your dreams tomorrow.  Want to pay for your son’s college tuition in 10 years?  You need to set aside X dollars per month starting today.  Want to retire at 50 instead of 65?  Up your 401k contributions by X dollars per month.  Instead of just dreaming about what you would like to do “some day,” you will now be able to see what steps you need to take to make that dream a reality.

4.  You will get a financial reality check.  You only make so much money.  You can’t save more than you make.  If you find that the goals you have for your life aren’t in line with your current income, this is important information to know.  You have two options, to either increase your income or cut back your spending.  Sometimes it takes this harsh realization to motivate a person to pick up a small extra source of income, or cut back on some of those expensive habits.  If your long-term goals are really important to you, a little sacrifice now may go a long way towards your happiness in the end.

5.  You will gain an objective outside opinion.  Sometimes it’s just good to have a fresh set of eyes look at a situation.  You are so embedded in your own finances that it’s hard to take a step back yourself to make sure you’re making the smartest decisions.  Your financial planner will review your insurance coverage to make sure it’s where it needs to be (many people take out a policy and then never revisit it as their income and family obligations increase).  He will check to make sure you are saving in the most tax-advantageous way possible.  He may suggest ideas you haven’t considered before- like refinancing your home, or rearranging which debts you should prioritize to pay off first.  Even minor tweaks that your planner might suggests can lead to major long term benefits to your overall financial situation.

6.  You can track your progress.  A financial planner will input all the data that you provide and produce a lovely document, full of nice colorful graphs that show you where you are and where you need to be.  Among these pages will be one that shows your calculated net worth, which is simply the total of your assets minus your liabilities.  This number should never be used to compare to the net worth of others, but rather as a marker for your own progress.  Each year when you get your updated report you can track that number to make sure it is moving in the positive direction.  Even if your net worth is negative, seeing that number creep closer and closer to zero is extremely satisfying and motivational.  If your net worth is not increasing at the rate that you’d like it to, that can precipitate a discussion about what changes need to be made to get that number closer to where you would like it to be.


Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of her employer or any other person or entity.

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