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Do you need a professional financial advisor?
In a society that grows more complex every day, consumers are presented with the constant pressures of family, career, community responsibilities and personal enrichment. The financial marketplace is ever-changing with new laws, regulations, economic events, market changes, product offerings and conflicting media messages. Making the right financial moves at the right time is critical to achieving security and accomplishing personal objectives.
Do I Need a Comprehensive Plan?
Maybe! The decision process is a bit like a sick person visiting a physician. Often a doctor quickly recognizes the problem and provides a prescription or treatment. Other times a complete exam and many tests are required to properly arrive at the diagnosis that leads to surgery, medication, recuperation and long-term improved health. You must have confidence in the skill, education, ethics and dedication of any professional you consult. You also want the confidence that come from knowing your advisor is committed to on-going professional education. When a comprehensive approach is truly required, then an instant remedy might be a serious mistake.
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Frequently Asked Questions About Financial Planning
What is Personal Financial Planning?
Expert guidance by professionals for the improved coordination of financial decision making to satisfy life and estate needs. Direction of portfolio (asset/liability) decisions. Fulfillment of portfolio needs through specific product and vendor choices.
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Why Do I Need Personal Financial Planning?
To organize your finances in the most efficient manner to reduce taxes, maximize investment return, provide adequate risk management, save time and attain financial peace of mind.
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Can't I Be My Own Financial Advisor?
Perhaps, but will you? Most business people and professionals are finding it increasingly difficult to plan adequately for their personal financial growth and security. Among the most common reasons for their frustrations are:
- Lack of time the wide variety of today's investment opportunities
- The complexity of ever-changing tax laws
- The entwining of employee compensation and benefits
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What is Typically Included in a Comprehensive Financial Plan?
A plan may range from 50 to 150 pages, based on the complexity of circumstances and the degree of explanation and detail:
- Cash Flow Budgeting Analysis
- Capital Management (debt and investment portfolios)
- Estate Planning and Liquidity Analysis
- Income Tax Planning
- Retirement (forecasting benefits, costs and options)
- Insurance Needs (life, property, casualty and disability)
- Educational Funding Requirements
- Employee Benefit Analysis (coordinate personal holdings)
- Closely-held Business Analysis
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What's My Role in the Planning Process?
You and your spouse provide information about your personal and family goals, attitudes about taxes, indebtedness, investment risk and security. Your financial plan will take this information into consideration. You will also be called upon to update this data at least once each year.
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What Credentials Should I Look for in a Planner?
Financial planners can have experience in many fields, including accounting, law, banking, life and health insurance, casualty insurance, finance, business management, taxes and investments. Professional designations include:
RFC® - Registered Financial Consultant
CFP® - Certified Financial Planner
ChFC® - Chartered Financial Consultant
CPA - Certified Public Accountant
CLU - Chartered Life Underwriter
CPCU - Chartered Property and Casualty Underwriter
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Are Fees for Financial Planning Tax Deductible?
Yes. Expenses for investment and tax planning are deductible, as itemized expenses, subject to limitations - IRS Section 212.
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How Can I Measure the Worth of Planning?
After your situation has been analyzed and recommendations made, you will be able to compare clearly your present financial condition with what is projected for the future. The long range benefits should far outweigh the costs.
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What Do Personal Financial Plans Cost?
Planners usually charge between $500 to $5,000 for their advice, but fees can be as high as $10,000 depending on the complexity of the plan. Planners generally charge a fee in order to provide an objective analysis. Yet clients will still pay commissions when they buy stocks, bonds, insurance policies and annuities.
Since there are commissions associated with the sale of nearly all financial or insurance products the financial planner may also receive additional compensation in the form of commission on the ale of these specific products.
Some planners still rely solely on income generated from the commissions when clients buy stocks and bonds, and use the plans as a way of generating sales.
A small group of planners charge fees only and handle no products at all.
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Will Personal Financial Planning Make Me Rich?
Unfortunately, there are no get-rich-quick schemes that really work. All the more reason for personal financial planning; it can help you keep more of what you earn and keep your savings working harder. It does this by:
- Increasing the productivity of assets
- Providing capital growth and security for your family
- Broadening asset structure to reduce risks
- Providing participation in new investment opportunities
- Increasing disposable income through tax savings
- Selecting investment alternatives more carefully
Minimizing shrinkage of accumulated assets at time of: Death Disability or Retirement
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