Think Financial Planning Isn't for You? Think Again.

Many consumers are unsure of whether they need the services of a financial planner. Or some may assume that financial planner services are only for the super-rich. But financial planners are actually helpful in many situations that you might not consider. While financial planning services usually cost money, they are an investment in your financial future or even present. So if you are sure that financial planning isn't for you, think again. You may be missing out on a great opportunity.

What Is a Financial Planner?

A financial planner is a professional money manager of sorts. We all know the importance of managing our finances. But beyond basic budgeting, many consumers simply don't have the time and expertise to manage complex financial planning goals. Financial planners offer services that fall into two general categories, though they often overlap.

The first category is planning. A financial planner can help you develop a plan, a financial roadmap, to reach specific financial goals. Typical goals include saving for retirement, saving for college, maintaining appropriate insurance, and planning for an end of life wealth transfer.

Another service financial planners offer is wealth management. Some aspect of wealth management is usually included in goal planning. However, wealth management also includes helping clients find appropriate investment funds and financial vehicles and managing those funds over time. While a financial planner is not an investment broker, they can serve as a liaison with your broker to ensure that your money is invested in the right way to match your goals.

Who Might Need a Financial Planner

Most people will fit one of the following categories:

  1. I'm lost about my finances and planning for the future. I know where I want to get, but I don't know how to get there.
  2. I really don't want to spend my time managing my finances. I'd rather have someone else deal with that.
  3. I'm an avid financial enthusiast, and I love to stay on top of my finances, but I could use an impartial and well-informed third-party to keep me on track and help me make decisions.

Whichever of these three categories you find yourself in, there is room for a financial planner to help you out.

1. I Need Help Planning

If you find yourself confused about the best way to make your money meet your expectations, a financial planner is a great resource. Often, life events can lead someone to seek out the help of a financial planner. For instance, if you are recently married, you may want help combining your finances with your partner. That involves tax considerations as well as managing financial instruments like insurance and investments, such as a 401k. Having children is another life event that can require a new look at your finances. Again, insurance and investments need to be adjusted, and you may want to consider saving for college. Some people seek out financial planning services in the wake of a divorce. A financial planner can help rearrange your finances to live as a single person and make changes to disentangle your finances from an ex-spouse. As one nears retirement, new considerations come into play, such as when to retire, early retirement packages, and living on a fixed income. Finally, many seniors want to make sure that the wealth they have accumulated in their lifetime passes seamlessly to their heirs, another ara where a financial planner can help. Other instances, like starting a new job, can also be a time to look to a financial planner.

2. I Don't Want to Spend Time Managing My Money

Did you know that two-thirds of Americans would rather talk about their weight than their finances? Working with a financial planner requires some open communication about your financial situation, but it can also relieve you from dealing with it the rest of the time. And even if basic budgeting isn't a problem for you, financial planning and wealth management is much more involved. Many people simply don't have the time or interest to keep up with the latest financial instruments, changes to tax laws and economic policy, and other factors that may affect your financial well-being. But financial planners stay up to date with all of that, so you don't have to.

3. I Want a Second, Unbiased Opinion

Even if you love the intricacies of financial planning, money can be a hard thing to manage. While we all like to think we are logical about our finances, emotions often come into play. It can be hard to judge how much to spend on having fun now versus saving for the future, even if the numbers are pretty straightforward. And it is easy to get carried away with an investment that looks or feels like a sure thing, even if you don't have the numbers to back it up. We're not saying that people can't stay on top of their finances. But it is always helpful to have a second set of eyes take a look. Your financial planner isn't attached to your money in the way you are, simply because they aren't the ones who get to spend it. An impartial second opinion is a great way to stay on track and make sure you don't make any costly missteps. If your financial planner heads off even one bad decision a year or recommends even one beneficial move, they could save you far more than you pay them for their services.

Paying a Financial Planner

Once upon a time, many financial planners made their money off commissions. When they moved your money around, invested in one fund or another, they were paid by the fund they invested in. However, the conflict of interest is clear. Most financial planners are good, honest people. But it can be hard to be impartial when one investment plan earns the financial planner a 20% commission and another offers 30%. Still, if you have an honest financial planner, you may save money since you only pay for what they actually do with your money, not just for amorphous planning services. 

Over time, many financial planners have shifted to a fee-based payment structure. Instead of financial planners making a living off what they do with your money, you pay them a set percentage of the amount of assets under management (AUM). Typical fees hover around 1%, sometimes a bit more or less. So if you have a financial planner managing $100,000 of your money, you would pay them $1,000 a year. This works at that amount of AUM. But if your financial planner managed $1 million of your assets, they would take $10,000 a year as a fee. To prevent huge fees, many financial planners have a graded scale where they take a smaller percentage as the AUM increases. The only shortfall of this payment structure is that, in order to make a living, many financial planners have a minimum AUM they will work with. If you are only forking over $50,000 of your money for them to manage, it is not worth the financial planner's time to work for $500 a year.

Another way to pay a financial planner has nothing to do with how much they manage. Instead, you pay them an annual retainer. This works on both ends of the AUM spectrum. For clients with fewer funds, a retainer may be the only fair way to pay a financial planner. And for clients with a very large AUM, paying a percentage fee may be unreasonable. The financial planner will have regular check-ins, often quarterly, and is available at any time for questions or updates.

Finally, many financial planners charge an hourly rate for clients who only need a one-time consultation, typically anywhere from a hundred to a few hundred dollars an hour. While this may seem expensive, clients will leave with a complete financial plan and concrete steps to take towards achieving their goals, often saving tens of thousands of dollars along the way. In some cases, the initial plan can become a stepping stone to a more regular relationship with a financial planner, including annual or even quarterly checkups.

Finding a Financial Planner

When it comes to handling your money, you need to know that you can trust someone. Look for a financial planner who is a fiduciary. The law requires a fiduciary to act in the best interests of the client, not themselves. However, one easy way to find a financial planner—or any service provider—you can trust is to go to You can find TrustDALE certified financial planners right here.

Dale's New Book:
Don't Get Scammed: Get Smart!


TrustDALE in your Community