Who Needs a Financial Planner?

Ask any financial advisor, and they’ll tell you that everyone (with money, at least) needs a financial planner or advisor. Ask any do it yourself financial planning type and they’ll tell you that no one need a financial advisor or planner. The answer, of course, is much more complicated than that. However, there are some people who are very likely to actually need a financial advisor.

Big Money Quickly

People who suddenly come into large amounts of money almost always benefit from a professional financial advisor. Unlike those who slowly grow into their fortunes, people who suddenly acquire wealth don’t have time to slowly build up experience with bigger finances. Consider someone who takes 5 years to grow into a $1 million net worth. That first year, they realize there are some tax things they need to consider. During the second year they find out other things, that maybe only really impact people with more than $500,000, and so on.

But, when the money comes all at once, there is no time to build up that experience, and, unfortunately, many financial mistakes are irreversible. People who sell their company, or whose stock options finally come in, or otherwise come into a lot of money fast, should at least consult with a financial advisor, even if it’s only to figure out what questions they should be asking.

financial planner helpful

Complicated Family Life

Sometimes, the complications involve tricky family or social situations. For example, taking care of an aging parent, while trying to plan for college for children, perhaps with different biological parents, and so on can be complicated. In a lot of these cases the need for a planner is less about investing and planning, and more about making either/or decisions. For example, is money better invested into a 529 plan, a Roth IRA, or long-term disability insurance if the goals are to take care of dad, sons and daughters and oneself? What are the implications for things like financial aid, medicare eligibility, and more? Those things move quickly away from the standard advice you see in the average financial magazine or financial advice book.

Major Life Events

Sticking 10 percent of your income into a well-diversified, annually re-balanced, 401k portfolio is the kind of thing a financially savvy person can do all themselves, and is likely to lead to a solid retirement. But, what about a job change, or retirement itself? What about a marriage (second marriage?), or another child?

These things can change both the long-term goals, and allocation of current assets very quickly. Reviewing them with a Certified Financial Planner may make sense to ensure there are no complications.

Procrastinators and Paperwork Avoiders

Many of my financially planning clients walked away without signing up after the first meeting. They thought they knew what to do. And, very often, they did.

The problem, was that they didn’t actually end up DOING what they knew they needed to do.

Knowing you need to make the maximum IRA contribution to a Roth IRA every year is a lot different than choosing a brokerage, getting the paperwork, filling out the paperwork, sending in the automatic ACH form, with a blank check, and…

Well, you get the idea.

Often, these people would come back months, or even years later. The only difference is that the second time, they knew that knowing and doing are different things. With an advisor, there is always someone to do all the paperwork for you and then call and say, come in for 5 minutes and sign these papers. For the busy, or afraid, this one service can be a life saver.

Who NEEDS a Financial Planner?

The reality is that some people really need a financial planner, and others don’t. Increasing amounts of money and complexity increase the need. In the end, if you make a plan and actually execute it, then you are way ahead of most people. If, on the other hand, something goes wrong on the way, then maybe you do need a financial professional helping you our around the tricky corners.

13 thoughts on “Who Needs a Financial Planner?”

  1. I like that you mention to look into getting a financial planner if you come into a large amount of money. Personally I would want to go on a fun shopping spree. Now is a good time to start looking into a financial planner so that I can better my current situation, and then I can have my shopping spree!

  2. Narnolia Securities Ltd

    Before hiring a financial planner, it is better to evaluate your need. What I feel is good leaders know when to delegate and when to seek expert opinions.

  3. You make a good point that those who have a unique social situation in their life may need some extra help planning out their finances. Many of these situations can have unexpected occurrences that can affect your money. I think it’s wise to have some sort of good plan that can carry you through those unexpected times comfortably so you don’t have an added measure of stress in your life.

  4. Camille J. Brown - Financial Advisor

    Great post. And so very true…knowing what to do, but actually executing a plan, are two very different things. Follow-through is key, and many need the accountability of a financial planner to make sure it happens in a timely manner.

  5. I actually had no idea that procrastinators are the people who need a financial advisor the most! Unfortunately, my husband and I both fall under that category. We always tend to fill out things like our tax returns really close to the deadline date. Maybe we should try looking into getting an advisor to help us get more prepared for the future financially.

  6. That’s a good point you make about how the increasing amounts of money and complexity increase the need to have a financial planner. I’ve heard that, when you meet with a financial advisor, they can help you set goals as to how you would like to increase your wealth. Seems awesome to me! I’ll definitely be keeping this info in mind as I choose whether or not I need an advisor.

  7. Thanks for the advice. I am going into my 2nd marriage, and I never thought about how my divorce and remarriage could affect my retirement. I need to meet with a financial adviser to figure this out. I want to make sure my investments are protected.

  8. Financial planing is a difficult thing and not many people know how to effectively manage their finances. There are so many problems that can arise from mishandling your finances and not knowing how to properly plan them all out. Getting help when it comes to money is an important thing. You don’t want to lose all of that hard earned money because of some stupid or simple mistake you accidentally made!

  9. My good friend inherited a lot of money from his grandmother who had passed recently and he has been overwhelmed with the amount and needs help managing it. I read here that people who come into large amounts of money should find a financial planner for this purpose. I’ll have to tell my friend about how he can be benefited from looking into this.

  10. Working with and understanding money is something that I have always struggled with. It’s hard to understand and its hard to even know how to get started. Talking to a financial planner isn’t a bad idea and I’m going to start looking into it and see about seeing one.

  11. I think that it’s important to get a financial planner or adviser. This is especially true if you are a procrastinator, like I am. I’m going to get one to make sure I don’t step over my price range. Thanks for sharing!

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