One For The Money

• Money is a sensitive topic [01:07]
• How financial planners add value [03:46]
• Providing peace of mind [09:34]
• Planner? Advisor? Agent? [13:47]
• Identifying competent financial planners [15:46]

Discussing finances can be a delicate and personal matter for many individuals. Unfortunately, some people equate their financial prosperity with their overall success in life, causing anxiety and fear over their perceived lack of progress. As a financial planner, I’ve had the opportunity to meet with countless clients to review their financial situations. I’m pleased to say that individuals are often pleasantly surprised by how well they’re on track for their financial goals.

Many people avoid seeking the help of a financial planner due to the complexity and emotional nature of finances. Instead, they attempt to manage their finances on their own or rely on advice from colleagues, friends, or family. However, in my experience of reviewing numerous financial plans, I have encountered many instances where mistakes or missed opportunities. These mistakes can include problems with company 401k plans, cash management, debt repayment, or tax planning, each of which can result in significant financial losses.

According to Vanguard’s research paper from July 2022, financial advisors have the potential to increase their clients’ net returns by up to 3% or more. However, the value added may vary depending on the client’s situation. To demonstrate the impact of a 3% increase in returns, consider this example: 

If $10,000 is invested at a 4% rate for 30 years, it will grow to just over $32,000. But if the same amount is invested at a 7% rate, 3% higher, it will grow to over $76,000. 

This example shows how a financial planner can significantly impact someone’s financial future. While these results are not guaranteed, they highlight the value that professional investment advice can bring. Most mutual fund assets are advised, which further supports the importance of seeking the help of a knowledgeable advisor who can provide tailored guidance.

It is crucial to choose a financial planner who is certified, meaning they have completed at least seven college-level courses covering a wide range of financial topics such as investments, retirement plans, taxes, insurance, and estate planning. They also have bachelor’s degrees. I wouldn’t let my friends or family work with anyone who wasn’t a CFP. Sadly, a CFP isn’t a guarantee they will have your best interests in mind, as I’ve seen too many CFPs sell only insurance products and not provide comprehensive planning.

A financial planner should thoroughly analyze your tax return every year and identify all the ways to help you avoid paying extra taxes. Without studying your tax return, how can any financial planner provide guidance regarding contributions, distributions, or other tax mitigation strategies? To create a comprehensive financial plan that aligns with your ideal life, a financial planner should consider all aspects of your financial situation, including investments, taxes, savings, pensions, income, goals, and real estate, and analyze the impact of adjustments on your ideal life. 

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

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