Six Reasons to Hire a Financial Planner (and Three Reasons Not to)

What is does a financial planner do?

Financial planners are industry specialists that assist individuals and businesses in making financial plans for the future.These professionals can assist you with managing an investment portfolio, purchasing stocks and other investments, providing investment advice, creating a plan to achieve a financial objective, and planning for retirement.

People hire financial planners for a variety of reasons, the most common of which is to seek an expert opinion and advise on their financial plans.While financial advisors are not required to have any formal certificates, many do and are well-versed in the area.

What is the difference between a financial advisor and a financial planner?

While many people use the terms “financial planner” and “financial advisor” interchangeably, the two terms are not interchangeable.The word “financial advisor” is a broad, umbrella term that refers to anyone who assists with financial concerns.Investing, real estate, significant purchases, life insurance, and even tax planning are examples of this.To deal with the public, financial advisors must have a special license (Series 65).

Financial planners assist individuals and corporations in making financial plans for the future.
Financial planners, unlike financial advisors, are not required by law to have any further certificates.
To be sure, many of them have licenses, special qualifications, and have completed additional training in order to better serve their clients.In addition, there are specific legal criteria they must follow in some areas of counseling.

Financial counselors and financial planners may perform similar tasks at times.

You should engage a financial planner in six situations:

  1. You’ve reached or are approaching retirement age.

When you’re nearing retirement, some of your most pressing financial concerns may appear.
Is there enough money in my account?
What alternatives do I have?
What can I do to increase my savings?
Financial planners are qualified to assist people in planning for and navigating the special issues that come with retirement.

  1. You received a hefty pay increase.

It may be time to put together a strategy if you suddenly have additional money flowing in.
While you may spend that money to improve your short-term quality of life, you could also consider using it to build your wealth and financial position in the long run.Financial advisors can assist you in determining where to invest, what options you have, and how to best improve your overall wealth.

  1. You’ve inherited money.

When you receive an inheritance, one of the most crucial occasions to seek the advice of a financial professional is when you receive a gift.You’ll probably have questions about where to invest, how to handle your deceased relative’s final financial desires, and how the sudden wealth will affect your life in the future.
All of these questions can be answered by a financial planner.

  1. You’re in the middle of a divorce.

Divorces can be devastating to your emotional health, but they can also be devastating to your financial well-being due to joint finances.
What goes to whom?
What can I do to safeguard myself?
What is the best place for me to reallocate my assets?
With the guidance of a financial professional, all of these questions and worries can be answered.

  1. You’ve experienced a huge life change.

Any other important life event may necessitate the assistance of a financial planner.
You should have a plan in place whether you change employment, downsize dramatically, locate a new source of income, have a kid, sell a business, or do anything else. A financial planner can help you sort through all of your options and make the best selection possible.

  1. You’re ready to regain control of your finances.

You don’t need a huge life event to motivate you to take charge of your current and future financial position. Contact a financial planner if you’re ready to develop a new strategy. A qualified financial planner can also help you find and plug any gaps in an existing plan that you want to stress-test for maximum performance.

You don’t need a financial planner if:

  1. If you live paycheck to paycheck, you don’t need a financial advisor.

You’ll still need a financial plan, but you won’t need the assistance of a financial planner.
Instead, to gradually get ahead, you should look into simple methods like budgeting, saving, and cost-cutting.Once you’ve mastered the fundamentals, you can seek assistance to advance to the next level.

  1. You’re in a lot of debt.

Financial planners are primarily concerned with assisting clients in increasing their wealth.
Financial planners are also not free, which is not ideal for someone who is in debt. Instead, you should seek the help of a credit counselor or a financial specialist who specializes in debt relief.Once you’re debt-free, you can start focusing on long-term growth.

  1. You have a good understanding of what you’re doing.

Financial planners are for people who require assistance in making financial decisions.
You might not want to pay for the assistance of a professional with the same knowledge base if you’re already an expert in the industry. Only if you’re short on time, need a second set of eyes, or want to stress-test your current plan should you deviate from this rule.

Is it necessary for me to hire a financial planner?

You probably need a financial planner if you realize you need to make some important financial decisions but don’t know what to do. You go to the doctor when you need medical assistance. Why not seek professional advice when it comes to your financial well-being? While each circumstance is different, it is nearly always advisable to seek financial counsel earlier in the decision-making process.