Build Your Financial Team

Managing and controlling your personal finances is challenging and essential. It’s challenging because there are many things that you have to account for: savings, spending, investments, Social Security, taxation, insurance, legal and retirement planning. And it’s essential because it is the foundation of your retirement life.

When it comes to developing and managing your personal finances, very few of us have the education, experience and inclination to do so entirely ourselves. What we do instead is form a team – intentionally or not. For example, we engage an Estate Attorney to help us develop our estate plan. We rely on insurance agents to assist us with various types of insurance or insurance products (annuities). Investment advisors help us manage our investments.

When you put it all together you have your financial team. But who should lead it? And who exactly should be on it? Depending on your circumstances, you might consider using a financial planner to build, coordinate and lead your financial team.

Note that a financial planner is one type of financial advisor along with stock brokers, investment managers, insurance agents, estate planners and bankers. While every financial planner is a type of financial advisor, not every financial advisor is a financial planner although they can be both. For example, an insurance agent can also be a financial planner. One thing to keep in mind is that anyone can pretty much call themselves a financial planner. While no guarantee of competence, one way to gauge someone’s qualifications as a financial planner is to find out if they have earned industry accreditations such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or a Retirement or Certified Investment Management Analyst (CIMA).

If you decide to engage a financial planner, it’s important to find the right one to lead your team. Keep in mind that financial planners specialize. Some work with only very wealthy clients, some work only with people from a certain profession and some specialize by virtue of their primary occupation such as an insurance agent who also is a financial planner. As mentioned above, credentials are important. So too is experience, communications style, personality and investment philosophy.

A good place to start looking for a financial planner is for one who specializes in retirement planning. They can help you build your long-term retirement plan, help you control your short-term spending (budgeting) and help you develop strategies for things like Social Security, taxes, investments and income generation. They will also be able to refer you to other financial advisors who have deep expertise in areas such as taxes and estate planning.

When it comes to working with a financial planner, only 52% of pre-retirees and 44% of retirees consult a financial planner or adviser according to a 2013 report from the Society of Actuaries called Understanding and Managing the Risks of Retirement. Given that so many people do not work with an advisor, the question then is should you consider working with one? That’s a difficult question to answer but here’s my take. Here are some examples of when to consult with a financial planner.

  • Pending retirement
  • Receipt of an inheritance
  • Sale of your house
  • Marriage or divorce
  • Death of a spouse
  • You are not achieving your financial goals
  • Estate planning
  • Net worth of $250,000

Are you using a financial planner? If yes, what has your experience been like? If not, why? Please use the “Leave a Reply” section below.

Thank you


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