Listen to the book authors, newspaper and magazine columnists and many web sites, and you will hear that financial advisors or financial planners are nothing more than glorified snake oil salesmen out to separate you from your hard earned money.
To listen to some in the finance industry and their champions, financial advisors and financial planners are bastions of righteousness steeped in knowledge about financial concepts so complex that no mere mortal could possibly hope to navigate the waters alone.
The truth of course lies in between. In real life, many financial decisions are frighteningly complex and, unlike other decisions you may face in life, many of them are irreversible once a mistake has been made. More importantly, some of the biggest financial issues, like retirement, take years to accomplish, and you get one chance. If you try the latest fad diet for a couple of months only to find out it doesn’t work for you, you start over a little wiser and with a little more experience. You could try different diets hundreds of times in your life while figuring out what works for you. You could also talk to friends and family, each of whom has dozens of dieting experiences to share with you.
Retirement is a little bit different. You will only retire once (you hope). If you don’t get it right, you can’t start over. Most of your friends and family have never retired either. Just like you, they are still working on it, so even if they did tell you what they are doing, they don’t know if it worked (will work) or not. Those that have actually retired may have used techniques that are no longer available to you, like a generous company pension.
This is where a good knowledgeable financial advisor or financial planner comes in. Over the course of a long career, he or she will have helped hundreds of people retire. They’ll see what works and what doesn’t. They’ll see what causes people to stumble and where the errors are made along the way, and they’ll guide you through.
Of course the key is “good, knowledgeable” financial advisor. Unfortunately, there are way too many financial advisors and financial planners out there who are missing one or both of those key words. This primer is meant to give you some background into just exactly what a financial planner or financial advisor is. (For example, an explanation of what the difference is between those two terms as well as how they differ from a broker, financial representative, etc…)
Check out the Financial Advisors Primer