When to Hire a Financial Planner

working with a financial planner

You have a great career, your bills are up to date, your debt is being managed and you have an emergency fund built up for unexpected expenses.

You feel like there is something more to be done with your money, but you don’t know what.

Hiring a financial planner can make the difference between actually reaching your financial goals and simply stressing about your finances the rest of your life.

Or maybe you feel the opposite. Maybe money stresses you out. When people start talking about investing or retirement savings, maybe you tune out and think, "I’ll get to it someday."

In either case, the thought of figuring out what to do next with your money makes you feel stressed out and overwhelmed. Which is a good indication that it might be time to work with a financial planner.

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Hiring a financial planner can make the difference between actually reaching your financial goals and simply stressing about your finances the rest of your life.

What is a Financial Planner?

A financial planner is like a personal trainer for your money.

Your financial planner will sit down with you and help you clarify what you want your money to afford you – maybe a house, maybe a big family, maybe an early retirement, maybe all of it.

Once you get clear on what you want to do with your money, your financial planner will help you create a financial strategy for making it happen through tools like investing, retirement and estate planning.

A financial planner can help make some of these more daunting areas of your financial life more manageable by breaking down the jargon and explaining what different financial terms and strategies mean, and why they actually matter in the context of your life.

They can help you assess all the potential courses of action and decide on the one that’s best for you based on your unique circumstances, values and priorities.

When to Hire a Financial Planner

If you have a high income or a high net worth, you may consider hiring a financial planner to help you protect and grow your assets. But you don’t need high income or a high net worth to consider working with a financial planner.

There are many other instances in which working with a financial professional can help.

An outside, objective opinion can help make sure you’re managing your money the most effective way.

For example, when going through major life changes, like a marriage or a divorce or having kids. These lifestyle shifts can come with major costs and new financial considerations like life insurance and college savings. A financial planner can help you navigate and prioritize these new financial realities.

Working with a financial professional can also be helpful when it comes to thinking about retirement. Your financial planner can help you determine how much you actually need to save, the best accounts for growing your retirement savings and the best strategy for withdrawing from your retirement accounts to make sure your money lasts as long as you need it.

Financial planners can also be particularly helpful in circumstances that require special considerations, like self-employment, where there are different financial challenges and needs to consider beyond the norm.

If you find yourself in a unique situation – for example, managing a chronic illness or raising a child with long-term special needs - working with a financial planner with experience and specialized knowledge in that specific situation can help you make the right decisions.

Finally, a financial planner can serve as a valuable second set of eyes on whatever financial plans you already have in place. An outside, objective opinion can help make sure you’re managing your money the most effective way. And if you’re not, a planner can help point out and fix the financial problems that could potentially cost you in the future.

How Much Does a Financial Planner Cost?

Different financial planners have different payment structures, but there are three main types…

Commission- based: These planners may offer free financial advice, but they make money by selling the products they recommend, like mutual funds and life insurance.

Fee-only: These planners are paid directly by you, the client, for their advice. Payment structures vary, but can be anything from a monthly retainer to an hourly rate.

Fee-based: These planners are a combination of the two, charging both client fees and earning commissions on the products they sell.

When considering a financial planner, be sure to ask about the fee structure. And read the fine print before you agree to anything, so you know exactly what you’re paying for.

Whether you decide to consult with a financial professional on a one-time basis or develop an ongoing relationship, working with a financial planner can help make navigating your financial life a lot easier and can help you reach your big lifestyle goals, that much sooner.