- A financial planner will help you better understand your current situation and get organized.
- If you're not sure what to do, a financial planner can help you identify goals, then create a plan to reach them.
- A good planner will help you stay the course and monitor your progress, which are key steps in the planning process.
Consider a co-pilot when facing your financial future.
Whether you have a complex situation or just a few questions to ask, bringing in an expert is an excellent way for many Americans to achieve financial peace of mind. Hiring a financial planner has myriad benefits. Read on to learn more.
1. Understanding your situation
When it comes to personal finances, many Americans don't know what they don't know. And if you think that your finances are healthier than they actually are, you could be in for a rude awakening.
The first step that a financial planner will take when working with you is fact-finding, so be prepared by being organized. A planner may ask for everything from three years of tax returns to estate planning documents. With this information, the planner will both evaluate your circumstances and develop recommendations according to your goals, keeping you in the loop throughout the process.
2. Setting goals
But what if you don't have any financial goals? A financial planner may help you set goals that are both attainable and relevant to your situation.
Typically, planners are happy to lend insight into which areas of your financial life need more focus, such as cash flow management or tax-efficient investing. Then, a planner will help create goals that will set you on the right track without becoming overwhelming. A good goal is not just specific, but attainable and timely too.
3. Creating a plan
Reaching your goals is more than a matter of willpower, and is also about bridging the gap between where you are today and the goals you've set along the way. Financial planners are experienced in creating a roadmap, or financial plan, to guide you toward your goals.
Financial plans can take many different shapes, but typically they segment your financial picture, identifying your current situation and your planner's recommendations to move you forward. For example, your financial planner might present you with a report broken into categories such as "Cash Flow," "Retirement," "Tax Planning," and more.
In the "Retirement" section, you might see your current retirement account contribution rate and a note from your planner encouraging you to increase this rate by 1% per year, an attainable and timely goal. Your planner will review this information with you, but you will always have a copy of the roadmap. Remember, this plan is subject to change as your life circumstances change, which brings us to the last benefit of hiring a financial planner.
4. Implementation and monitoring
The only guarantee in life is that things won't stay the same. Your financial plan should be flexible enough to roll with the punches, and a financial planner can help you keep on top of your situation.
Implementing your plan isn't always as easy as following the instructions set by your financial planner. More often than not, the goals set above need to be tweaked or adjusted, something your planner will be experienced in. When things change, your planner should monitor your circumstances and adjust the plan accordingly. Typically, planners will meet with their clients annually, or even quarterly, to check in and make updates.
Working with a financial planner means more than just making a one-off plan. Planners will work to not only develop an initial plan, but refine that plan as your financial circumstances change. Remember, your planner will act as your co-pilot, so an annual or semi-annual review is your chance to regularly check in with your finances.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.