Do you know why you need a financial planner? If you were watching the market’s unprecedented plummet in the face of the novel Coronavirus outbreak, you likely heard conflicting guidance about how to approach investing. Some were so scared watching their retirement accounts take a $17,000 nosedive in one day that they closed their accounts.
Others advocated for buying into the markets when prices were low. What advice should you take and who should you trust? What fits best into your long term investing goals? What are you most comfortable with and how can you best sleep knowing that you made the right financial decision?
This is precisely why you need a financial planner, not a generic answer from some investment blogger on the internet. You need a plan tailored to you that only a financial planner can provide.
Let’s take a look at some of the reasons you may think you need a financial planner vs. why you actually need a financial planner.
To make you more money in the stock market
You may think that a financial planner’s sole goal is to help you make more money in the stock market, but that is incorrect. Their actual goal is to help your money reach your individual financial goals, whatever that looks like. A good financial planner will tailor their advice to their client’s individual investment goals and timeline. If you are planning to retire within the next year, your financial planner will advise you differently than if you have 20 more working years to let your money regain from a down market. And financial planners also take into account their client’s individual family and health needs (like caring for a disabled child or personal health issues), how risk-averse the client is, and the client and advisor’s personal investing philosophies. Maybe the goal for you is not to make as much money as possible right now but rather to keep your assets in slow growth but stable accounts that can ensure it is there when you need it in the near term. If that be the case, an aggressive investing plan that will pay greater dividends in 15 years won’t benefit you as much. Overall, a financial planner can walk you through the fundamentals of investing and guide you to a personalized investment strategy.
To help you pay down debt
You may think that a financial planner’s job is to help you pay down debt but their goal instead is to help you see your larger financial picture. Paying down debt is key to financial success and building wealth, but it is not the only tool in a financial planner’s toolkit. A good financial planner knows that the key to prosperity for their clients is to help them see the impact of day to day decisions and purchases. A financial planner can help you see the consequences that your financial choices today will have on your finances 5 or 15 years in the future. Spending all you earn today or not paying down debts will have far-reaching financial consequences. If instead you had lived below your means and socked away some savings, or even saved the money that you otherwise paid out in interest on higher interest loans, you could set yourself up for a brighter financial future. Alternatively, maybe the right choice for you today is not to use all your available cash to pay down debts but perhaps the best strategy is to invest to earn at a higher rate than your low-interest debt. Financial planners can help guide you to the right choice for you, not just a blanket approach that they suggest to all their clients.
To help you find the best mortgage
Financial planners are not transactional. They are not just there to advise you on what kind of mortgage to get. Instead, a good financial planner will take a holistic approach and help you make all kinds of large financial decisions and craft a plan that works best for you. A financial planner will give you a sounding board to help you work through your major life and money decisions. Your money intersects with all your life decisions whether that is deciding on what college to go to, getting married, moving, choosing a career path, buying a house, having children, dealing with financial setbacks from a plummeting stock market, dealing with health issues, aging parents that need your care, major home repair and renovations, planning vacations, planning for your retirement, and planning to send your own children to college. Your financial planner can walk with you through all these life and money decisions and help guide you to wise choices to protect your money, family, and future. They are there to help you play the long game with your money, not just advise whether you should choose an FHA mortgage or not.
Sure, there is a lot of financial advice out there on the internet and it is easy to mistakenly view a financial planner as a transactional based relationship. But working with a financial planner is far more than just Googling a financial question and reading a few articles suggesting what you should do to solve your problem. They are not there to simply give you a generic answer and go on about their merry way.
Instead, what you need in a financial planner is a person that understands you, your money, your needs, wants, and goals. They will give you much more than just a simple yes or no answer or direct you to a specific index fund to invest in. Instead, their job is to get to know you and figure out how best to help you meet your financial goals. There is nothing more personal than how you spend your money, and a financial planner is not there to dictate to you what you should do with your money. Rather, they are there to guide you toward a way to grow and spend your money the best benefits you individually.
