Financial planners are individuals with a vast knowledge of financial planning
methods and professional-level money management skills and expertise. A
certified financial planner has completed certification programs that enhance
and verify their expertise.
Financial advisors can be hired to help with an overall plan – like early
retirement planning. They can also be engaged for a specific purpose – like
purchasing long term care health insurance or creating an estate plan.
Retirement financial planners will usually first help their clients identify
their financial goals and risk tolerance, then recommend plans or execute
discrete tasks to achieve those goals.
What an Independent Financial Advisor Is and Is Not
Many people confuse financial planners with stockbrokers, insurance agents or
other salespeople offering financial services. These salespeople's commissions
are often based on selling specific financial products – possibly in conflict
with your best interests.
On the other hand, the main job of a financial advisor is to help you understand
and achieve your goals, by managing risk and deploying your finances in the
service of those goals. A financial planner can help you purchase a stock or
insurance policy, but a good financial planner will put your needs first –
regardless of any benefit they might earn from the sale of a product.
Furthermore, financial planners are not usually attorneys; though they will help
you identify and understand when you might need legal advice or documentation.
Think of retirement financial planners as your personal coach for financial
retirement planning – someone who will analyze your situation, understand your
goals, understand your ability and willingness to accept risk, then design a
game plan for retirement and help you execute a winning retirement plan.
What an Independent Financial Advisor Can do for You
When considering using a financial planner for your retirement financial plan,
you will likely want them to look at your overall situation. However, financial
planners can also help with a single issue – though the advice should be given
in the context of your overall goals, risk tolerance and needs.
Below are some of the ways people use retirement financial planners:
Integrated Planning – Retirement Planning: With integrated financial
management and planning, the financial planner will usually look at all details
of your existing financial situation – your assets, liabilities and how you
currently and historically spend money and try to understand your overall goals
– both financially and personally.
The financial planner will take this information and create a detailed plan for
achieving your goals of successful money management. Because so many financial
concerns are inter-related and complicated (for example, making a particular
investment could have beneficial or damaging tax consequences after retirement)
it is essential that retirement financial planners know about all the
investments and financial products you have that might affect your retirement
Budget Review: A financial advisor can help you analyze how you spend your money
and make suggestions for improving your budget.
Tax Planning: There is no way around it – taxes are confusing, daunting and have
a big impact on your finances. A financial planner will understand the tax
implications of the different kinds of financial decisions and help you optimize
your tax situation – now and in retirement.
NOTE: It is important to understand the difference between tax planning and tax
preparation. Tax planning tailors your financial situation to minimize lifetime
tax liabilities. Tax preparation is preparing and filing the paperwork.
Estate Planning and Retirement Planning: As if planning for how to pay for the
rest of your life in retirement were not tricky enough – most retirement plans
also include provisions for what you would like to leave behind. A financial
planner will help you with: living trusts, wills, powers of attorney, life
insurance, trusts, heirs, charity and other estate planning issues.
Insurance Analysis: When most people think of insurance, they think of fire
insurance that enables you to recover after such a disaster or health insurance
that helps cover your medical bills.
However, insurance can also be a powerful financial tool with a multitude of
benefits – helping with asset protection and quality of life as well as
providing a legacy to your heirs.
No retirement financial plan should be created without considering insurance. Of
particular importance is long term care insurance, which can help protect your
retirement and estate from ruin that might result from expenses associated with
unexpected illness or injury. (Click here
to learn more about long term care health insurance.)
Investment Planning: Advice and Monitoring of Retirement Investments: Financial planners can
monitor how your investments are doing relative to the goals that you have set.
These investments can include various financial products like stocks, bonds,
mutual funds held in different types of accounts (taxable, tax deferred and tax
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