You pay for financial advice, but it can be worth it.
Don’t let financial planners intimidate you. They’re there to help, and most of them do a great job. The question isn’t really whether financial planners are worth what they earn; it’s more about whether it’s the best choice for you.
If you’re on the fence about hiring a planner to handle your wealth, or prospective wealth, here are a few things to consider before taking the plunge:
Can You Feel Comfortable with Someone Else at the Helm?
Money can be an intensely private matter for some people. No matter how professional and experienced the financial planner or how heavy her stack of testimonials happens to be, there are some who can’t trust that a third party will have their best interest at heart.
If the very idea of turning over the responsibility to someone you don’t know makes you break out in hives, then paying someone doesn’t make sense for your situation. Just because everyone else, or anyone else, is hiring a financial planner, that doesn’t mean it’s the best choice for you. In the long run, you’d be paying fees in exchange for panic attacks.
That said, the right financial planner could very well ease your worries and take some of the burden off your shoulders. You probably didn’t go to college to learn about finances. But your financial planner did.
Do You Have the Time and Inclination to Learn what You Need to Know?
Financial planner fees can add up to a lot of money at the end of the year. But if you can devote time to research and self-help financial planning materials, both in books and online, then think of the money you’d save! The information age really is still going strong. You can learn about how to manage your own money, or you can take advantage of free or low-cost online services that are designed to assist you, not take over.
If your days are already full enough, thank you very much, the idea of taking on one more job might send your brain into overload with no time to relax. The financial planning industry is evolving along with everyone else. There are options for people, perhaps like you, who want the best of both worlds – reasonable fees and steady financial growth.
Many planners now offer a flat fee, which means you don’t have to worry about whether their advice is based on getting the best commission for a service or product, according to financial guru, Clark Howard.
Is Your Financial Portfolio Worth the Cost of a Financial Planner?
Whether or not you hire a financial planner might boil down to what your portfolio is worth (or if you have a portfolio at all). High hopes are great, but if you haven’t yet managed to save enough to think about investing, you’re probably better off on your own until you’ve got something to work with.
On the flip side, the more you have the more important sound advice becomes. What’s worse than not saving and investing at all? Losing your wealth because of poor choices. Howard explains that too many people are emotionally attached to their money, which makes buying high and selling low a reaction that’s difficult to avoid. It’s also a quick way to obliterate what you’ve worked so hard to earn.
Just like in every other industry, there are good financial planners and there are bad. Some are for so-called high rollers, and some are for average Janes and Joes. The fees vary accordingly.
If you’re just not ready to put your money in the hands of someone else, and pay them for the privilege, then you’re probably better off learning more and trying out some of the free tools online. Education is never a bad thing, and New Retirement is a rich resource of materials to help you on your journey.
You might find that you’re a natural, and never look back. But if you’re like millions of others, there will come a time when a financial planner can take your wealth to heights that you didn’t think were possible.
Do You Have the Discipline to Take Action On Your Own?
Let’s say you have the know how to manage your own finances. The question then becomes, do you have the discipline to nurture your finances the way a financial advisor would for you? Ideally you are taking action every month to research, trade, plan and calculate — ideally without emotion.
It is the advisor’s job to manage your money and help you create and maintain a financial plan. Having someone do that for you makes sure it gets done and gets done regularly
