Financial Planning

financial advisor and client wearing masks


What Does a Financial Planner Do?

Essentially, a financial planner is a person who helps you formulate a plan to organize your budget and get you on track to achieve your long-term financial goals. Enlisting the help of a financial planner means you have an expert in your corner who can give informed advice on how to make your money work for you.

One of the benefits of a financial planner is that he or she can pinpoint areas where you may need help, such as bad saving habits or credit card debt and put together a plan for financial success. For instance, they can identify what type of retirement accounts would benefit you and figure out exactly how much you need to put in those accounts every month.

In addition, a financial planner can also manage some of your assets, such as an investment portfolio, to help you make prudent decisions about the future of those assets.

What is the Difference Between a Financial Planner and a Financial Advisor?

Financial planners and financial advisors are very similar in that they both help other individuals manage their money. Basically, a financial advisor is a broader term for anyone who helps manage your financial accounts and investments.

A financial planner, however, is an industry professional who enables both individuals and companies devise a plan to accomplish long-term financial goals. Thus, every financial planner is also a financial advisor, although not every financial advisor is necessarily a financial planner.

For example, a planner may have a specific area of expertise such as taxes or investments or estate and retirement planning. For this reason, financial planners may be investment advisors or brokers, accountants, or insurance agents.

In addition, they may hold various licenses such as a Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), or Chartered Financial Consultant (ChFC), among others. One of the easiest ways to look at it is that a financial planner is basically a more specific type of financial advisor.

How Much Does a Financial Planner Cost?

A financial planner’s fees will depend on how he or she charges clients. While some planners bill on an hourly basis, others charge a set fee to put together a personalized plan. In addition, a planner who manages their clients’ assets typically takes a percentage of those assets as payment for services (usually about 1%).

The amount you pay usually corresponds to what your needs are. If you have complex financial arrangements that require year-round supervision, you may wind up paying a few thousand dollars annually to have a planner on retainer.

On the other hand, if you only need a few consulting sessions for advice, planning, and progress checks, you might spend several hundred dollars for a few hours of a planner’s time. Or you might pay a bit more for a more personalized plan.

Do I Need to Hire a Financial Planner?

In general, the more complicated your financial situation, the more you would benefit from the services of a financial planner. If your finances are still pretty simple, you might be able to do it yourself. Nevertheless, a knowledgeable financial advisor can bring an outside perspective to how you should invest and look after your money. He or she can also determine your financial priorities and make recommendations about things like appropriate insurance coverage and other protections.

Furthermore, a financial planner can be beneficial when you experience a major life change such as a marriage or a divorce or an inheritance. Although you might hesitate at the idea of spending money to save money, an experienced financial planner can pay for him or herself many times over in the long run, especially if you have difficulty looking after your finances or adhering to financial goals on your own.

Financial Advice During Covid-19

With millions of Americans losing their jobs due to the coronavirus pandemic, many investors are wondering how to protect their investments. The key, as always, is not to panic but to adjust your financial plans to keep this short-term public health crisis from becoming a long-term financial disaster. Indeed, this is the perfect time to reexamine your portfolio with your financial adviser to plan how to endure this hardship and emerge successfully on the other side.