Your finances are, by their very nature, personal. Every person’s financial life is different, and every person’s financial goals are different. As such, the idea of handing the reins over to a financial planner can be a bit intimidating. Here’s the good news: you don’t have to.
Hiring a financial planner is not about relinquishing responsibility for your own finances. It’s not about letting someone else make your money decisions. Rather, working with a financial planner is inviting someone else to walk alongside you. It’s about forming a working relationship with a knowledgeable professional who can guide you in defining your financial goals and working towards them.
What Does A Financial Planner Do?
People often think of financial planners as professionals who invest and manage their money. Indeed, this is a part of a financial planner’s job — but it is only one piece of the job. When searching for a “financial planner near me,” keep that in mind.
On a larger scale, financial planners listen to their clients’ concerns, review their financial positions, and identify their clients’ goals, both long-term and short-term. They then work alongside the client to design a customized plan to meet those goals. Every client’s plan looks different. It’s important that the plan is one that the client understands, feels comfortable with, and is confident they can follow.
Financial Planning Is A Journey
Life is a journey, and your finances are an intermixed and intermingled part of that journey. Your financial life is related to all other aspects of your life — the home you live in, the vacations you take, and where your children attend college. Finances mold and shape every piece of your life’s puzzle. So, in order to best help you work towards your financial goals, your financial planner needs to get to know you.
This is best described as taking a holistic approach to finances. Instead of considering your money, only, we consider your lifestyle, preferences, dreams, family, and how money interacts with them all. That’s why it’s helpful to search for a “financial planner near me” and meet with your planner in person, if possible.
The financial planning journey starts with an analysis of your current position. Where are you invested? How much have you been saving? Where are you spending your money? Just as importantly, what aspects of your life and lifestyle are most important to you?
Once your financial planner has a working understanding of your current life and financial position, they can begin talking to you about your goals.
Often, clients have a hard time defining their goals at first. They know what they want out of life, but they’re not sure if their goals are realistic. A financial planner can create a realistic, specific version of your goals. You may be capable of achieving far more than you ever imagined, as long as you make smart and goal-oriented decisions along the way.
Your goals do not have to be purely financial, and in fact, it works better when they are not. Maybe your goal is to retire and move to the Caribbean when you’re 60. Or maybe your goal is to quit your job and start your own business in the next five years. Share your life goals with your financial planner, and they’ll help you lay down the financial track to achieve them.
In creating a plan, your financial planner will focus on education. In other words, your planner won’t just tell you what to do. They’ll explain why each step is important. They’ll discuss the pros and cons of each recommendation and guide you in making the best choices for your own life and family.
The process of creating a plan also takes your current lifestyle and relationships into account. If you need to make big changes in your financial life, you can discuss how those changes may impact your family life, professional life, and even your mental health.
Your financial planner should never force you into a plan that you do not understand or one that feels unrealistic. Yes, you may need to have some uncomfortable conversations along the way, but the goal of those conversations is to find a way for you to most confidently move forward. When you first type “financial planner near me” into the search bar, keep this in mind. You’re looking for someone to guide you, not someone to replace you.
Financial Plans Are Flexible
Life is not a straight line. It’s more like a twisted, turning path through a beautiful forest with a few potholes in the path. Or, in the words of John Lennon, life is what happens when you’re busy making other plans.
Rarely do clients follow the specific path laid out for them when they first meet with a financial planner. Life changes, and in response, you and your financial planner make changes to the plan.
Big life changes that affect your finances are often called Critical Financial Events. Common Critical Financial Events include losing your job, buying new property, receiving an inheritance, and having a child. Some Critical Financial Events are positive, and others are negative. When they do occur, you can meet with your financial advisor, discuss how they affect your plan, and then make changes to your plan in order to ensure you’re still able to meet your goals.
Sometimes, your goals may change along the way. For example, a lot of clients in their 30s have a vision for their retirement that completely changes by the time they reach their 50s. As your goals change, you and your financial planner can create new money plans to meet those changing goals.
What if you find yourself wanting to deviate from your financial plan? Then, you can call your financial planner and talk through the decision. There may be other changes you can make to your plan in order to accommodate your most recent desires.
For instance, imagine you’re just itching to buy a vacation home. Your financial planner may explain how it’s feasible if you change some of your investment contributions and move your target retirement date back a year. You’ll then be making a fully informed, educated decision, rather than just purchasing the home on a whim.
Financial Services Inside Your Plan
So, the role of a financial planner is to help you define your goals and create a plan that allows you to reach them. But what might the elements of that plan be? Of course, this varies from client to client, but here are some of the key services that financial planners offer their clients.
1. Portfolio Review
If you currently have investments, your financial planner can evaluate your portfolio and recommend changes, if needed. For instance, they may recommend diversifying into a different market sector or adding certain stocks to your portfolio.
What if you don’t have an investment portfolio? Then, search “financial planner near me” and make an appointment. This is generally one of the first things they’ll do for you.
2. Wealth Management
Wealth management is a more advanced form of investment management, primarily for those with larger portfolios. Your financial advisor can help you select the most tax-advantaged accounts for your unique financial position. They can also help you plan your estate and investments in a way that maximizes your returns over the years.
3. Retirement Planning
How much should you be contributing to your retirement accounts? What types of retirement funds are best suited to your needs? When can you retire if your income stays the same or if it increases? There are so many decisions to make regarding retirement, and a financial planner can guide you in making them.
It’s never too soon to begin planning for retirement, either. When people start saving in their 20s or 30s, they find that their retirement plans become a lot more flexible. However, making poor investment decisions can undo all of the hard work you do in saving, which is why consulting a financial planner is so important when planning for retirement.
4. Lifetime Income Planning
When you are earning a certain income, it can be hard to plan for the future without knowing how much you’ll be earning then. A financial planner can give you a more realistic idea of what you can expect to earn, going forward, in your industry.
Your financial planner can also help you explore new and different ways to increase your income over your lifetime. Increasing your income may be a part of your financial plan — an integral part that allows you to be more flexible with the rest of your plan.
5. Insurance Services
Insurance exists to protect you from risk. But it can be hard to know which risks are worth worrying about, and which risks you need to protect yourself from. A financial planner can discuss the risks that may affect you and how to insure yourself against them.
One common example is life insurance. A good life insurance policy can protect your estate and ensure your loved ones are supported if anything happens to you.
Long-term care insurance is also important to consider as a part of your financial plan. Long-term care can be incredibly expensive, but a long-term care insurance plan can protect your wealth if you are incapacitated for a period of time.
6. Collaborative Meetings
Depending on your needs, your financial planner may also facilitate collaborations with other professionals.
For example, they may meet with you and an estate planner to make sure your estate is legally and financially protected, and that it is willed to the appropriate relatives. Or, they may set up a meeting with a CPA to review some of the more nitty-gritty details of your taxes, business plans, or day-to-day finances.
Having a financial planner facilitate these meetings can be incredibly helpful. As you work with a financial planner, they truly get to know you and your goals. They can speak to those goals as you discuss your future plans with other professionals who you may be meeting for the first time.
Searching for a “financial planner near me” and talking openly about your life and money may feel uncomfortable at first. We live in a society where money isn’t always talked about openly, and unfortunately, you do have to be careful when sharing your private information. But hopefully, you now have a better understanding of what financial planners really do, and how they really work.
It’s not about taking away your independence or controlling your finances. Financial planning is about defining your goals, guiding you towards them, and supporting you with the financial services that you require along the way. Together, we’ll get you there. Contact RLJ Wealth today.