When is the Right Time to Hire a Financial Planner?

How do you know when it’s time to hire a financial planner? Before jumping into this question, let’s address something even more simple: What exactly is a financial planner?

What Is a Financial Planner?

A financial planner is a qualified advisor who helps you manage your money and meet your financial goals: whether it’s a short-term goal like managing a household budget, or a long-term goal like saving for retirement.

The cost of hiring a financial planner varies. Expect to pay $150 and up per hour for an experienced professional. Some financial planners will also charge a set fee per project (for example, $2,000 to meet, assess your finances and create a tailored retirement plan). If the financial planner is managing assets or investments, they’ll typically charge you a percentage of these assets, i.e. around 1% per year.

The Benefits of Choosing a Fiduciary

A fiduciary is legally required to act solely in the best interests of their client – you! While every financial planner has a responsibility to meet your needs, a non-fiduciary may also recommend financial products that charge you higher fees and earn them a commission. A fiduciary, on the other hand, can only recommend what’s best for you.

Not every financial planner is a fiduciary, so be sure to check on this before choosing a planner.

When to Get a Financial Planner?

You can hire a financial planner anytime you need some extra help with money. Many people get a financial planner after reaching a significant life stage, such as marriage or divorce. Others hire a planner when they’re ready to set specific life goals, such as saving for kids’ college or retirement. Still others may schedule a one-off session to discuss a particular issue they’re facing and seek professional advice.

Here are a few common scenarios to consider hiring a financial planner:

• Marriage: Money is a top stressor for married couples. A financial planner can guide the conversation around combining assets and managing household finances as a team. If either spouse has debt, a planner can help create a workable payment plan.
• Divorce: Undergoing a divorce will no doubt change your financial assets and goals. A financial planner can support in terms of asset analysis, settlement strategy, and planning out a post-divorce plan for financial stability in the future.
• Expanding Family: The arrival of children means additional budgeting needs for the household! Whether saving for college or simply re-assessing how to make ends meet, a financial planner can offer expanding families useful insight and strategies.
• Retirement Planning: Preparing for retirement is a primary reason why many people hire a financial planner – and it’s never too early to start. The right professional can create a roadmap for saving and investment; explaining what you need to do in the short-term to retire comfortably later on.
• Asset Growth: A growing savings account is a good sign that it’s time to speak with a financial planner. They can help to invest it for the future and ensure you get tax benefits wherever possible. Hiring a fiduciary financial planner is always recommended, particularly in the case of asset growth.

In many cases, you may be wondering if it’s better to hire a financial planner, versus a lawyer, versus an accountant. Every situation is different, but keep in mind that the role of a financial planner is to assist in a holistic review of finances. They often work in partnership with tax and estate professionals, and can provide advice on these areas or direct you on where to go next for more help.

How to Find a Financial Planner?

Start by speaking with your network! Ask friends and family if they’ve had a good – or not so good – experience with a local planner. If you find someone who looks suitable and comes recommended, check their credentials including years practicing and if they are a fiduciary. Always meet with the planners before deciding to work with them — you are hiring them to help you, so consider interviewing various planners to find the one that fits best with you.

There are plenty of resources online with more information on what financial planners do, when to hire one, and how to find the right financial planner for you. Check out:

• https://www.letsmakeaplan.org/find-a-cfp-professional
• https://www.napfa.org/find-an-advisor
• https://www.plannersearch.org/

Happy planning!