Do I need a Financial Planner, or should I do it myself?

One of the main characteristics of money is that it is something we all use daily, making us feel that its handling is simple when it really is not.

In other words, money is something as familiar as brushing your teeth, it is something that is done daily, for which we receive some basic instructions, but we know very well that in case of pain or an emergency, we must go to a specialist and that as long as you have continuous check-ups, you will do better to avoid painful situations.

.

What are the primary sources people turn to for financial advice?

.

According to a study conducted by the Employee Benefit Research Institute in 2022:

• The number one source is your family and friends.
• And number two is Google, where they do their research.
• And number three is a professional in the area of ​​personal finance.

Similarly, this research shows us that 4 out of 10 people do not know where to turn when optimizing their finances.

On the other hand, we see a report by Charles Schwab called “Modern Wealth Survey 2021”, where it is pointed out that those who have a written Financial Plan made by a professional:

• 65% feel more financially secure.
• 80% manage their investment risks better.
• 71% have a better awareness of the costs of investments.
• 47% have no credit card debt.

So, one wonders why so many people decide to manage their finances themselves, and only 33% have a Financial Plan.

To answer this question, first of all, we must answer the following question:

.

What is the difference between a Financial Advisor and a Financial Planner?

.

Although it is true many times, Financial Advisor and Financial Planner are used synonymously; there is a fundamental difference:

The financial advisor typically focuses his efforts on managing or advising your investment portfolio. In contrast, the work of a Financial Planner is much more extensive since, although he can also manage your investments, he is additionally in charge of working with issues such as:

• Planning your goals, such as retirement, education, or purchasing a vital asset (house, new business, etc.).
• Helps you review your income and expenses to suggest improvements.
• How well you are covered at the level of insurance policies.
• As well as testamentary protection in case of missing tomorrow.
• And various topics such as Social Security, Medicare, debts, or donations.

Its job is to draw different scenarios and indicates the best way to achieve your goals.

But then, if the work of a Financial Planner is so essential, why don’t people consult him and prefer to do it themselves when they know that not even the best surgeon should operate on himself?

We could say that the answer to this question has many nuances since the scams suffered by some people with pseudo-Investment Advisors who engage in our profession are no secret to anyone, which causes some to have factors of distrust.

But let’s focus on those comments or myths that make some people not go to a Financial Planner:

.

1.- Financial Advisors or Planners ask for a minimum account amount to work with them or are very expensive, being only for the Ultra Rich:

.

The world of Financial Planning has been evolving, and although we might have thought this was the case until a few years ago, many advisors still ask for a high amount to work with them. Recently, the number of Financial Planners that offer advisory services per hour has been growing, where no minimum amount is requested, and the client pays for the number of hours that may be required or for a stipulated fixed amount.

This type of service works as in other professions, such as accountants and lawyers, where the person goes with their questions or questions about financial issues, and the Planner reviews the situation of each one and makes suggestions.

Thanks to these hourly financial planning services, the client can go over time-consuming the hours they need for those issues where they feel they need a second opinion, for situations like these:

• The time of your retirement is approaching, and you want to know the best way to use your money to optimize it at the maximum level of performance and fiscally.
• An important event is happening in your life: getting married, getting divorced, or having a baby.
• You want to change jobs or start your own company and don’t know if you are financially ready.
• You have doubts about investing your money in the best way, and you want a second opinion.
• You want to get out of debt and don’t know where to start, or you want to understand what happens to your money month by month and how you can save
• And issues in general, such as when is the best time to start receiving Social Security benefits, among many other tax issues and family or personal finances.

.

2.- If I had to look for a trusted Financial Planner, I don’t know where I could look for him or who to ask.

.

While it is true many may be called Financial Planners, only those who are CFP®Board CERTIFIED FINANCIAL PLANNERS must go through or complete a rigorous process that takes several years and includes:

• Educational Requirement: the preparatory curriculum includes more than 72 aspects of personal finance.
• Exam: CFP® professionals must pass a rigorous evaluation with confirmed cases to verify their level of knowledge.
• Experience: At least two years of professional development in ​​financial planning.
• Ethics: they are governed by a CFP® code of ethics where faults are penalized and could even lose their Certification.

And for many of us, the most important thing is that you must comply with the fiduciary principle, where you must always look for what is best for the client above your interest.

So if in the future you need to look for a certified financial planning professional, we suggest you go to this website: https://www.letsmakeaplan.org/

In the same way, if you need more information, we have in this other article you can find details on Why should you have a financial advisor? So click here.

.

3.- I must wait until my finances are a little more complicated or wait until I have more money so that it makes sense to seek a specialist.

.

This is another of those extremely dangerous myths because one of the most potent tools that personal finances have is time. To the extent that you make financial decisions early in your life and manage to change your financial habits, you can be sure to enjoy the future of financial independence that many desire.

For example, the other day, we attended the case of a person who told us that she had not come to us since what she had were debts and that she was waiting to get out of the credits of the cards to make an appointment.

This is a mistake since a Financial Planner can help you find the best way to pay your debts. Likewise, you should not wait for your assets to grow to feel that if you can rely on a professional, a Planner can help you determine what type of retirement account may be best for you.

Another of the opportunities for improvement that we see in clients who consult us is that, although many want to invest their money themselves, it is always important to validate certain principles of rebalancing, diversification, and costs—remembering that the Schwab report indicates that 87% of those who rely on a Financial Planner apply rebalancing strategies to their portfolios.

.

Conclusion

As in other aspects of life, professionals are people who study and prepare to provide the best of themselves; in the same way, it happens with Certified Financial Planners, so our suggestion would be:

– Remember that there is an hourly planning scheme; you do not have to wait until you have significant capital, or if you want to do it yourself, it is always good to have a second opinion.

– Always support yourself with Certified Financial Planners, CFP®.

Alonso Rodríguez Segarra

Founder & CEO Advise Financial

advise-financial.com

Alonso is a “CERTIFIED FINANCIAL PLANNER™” who is dedicated to increasing the Financial Well-being of nurses, physicians and successful immigrants in Florida and Texas. With more than 20 years of experience in the world of finance, always working for the best interest of his clients, under fiduciary criteria.