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What Is a Financial Planner, and Do You Need One?

A financial manager examines your accounts before devising a strategy to help you achieve your objectives. Investment counseling is another service provided by some financial advisors.

You've got some financial concerns. There are answers on the internet. Mates, family members, and Instagram influencers all think so.

Financial advisors will help you break through the clutter and send you professional finance advice that is customized to your unique needs.

Financial planners: what they do

A financial advisor assists you with achieving your short-and long-term financial objectives.

That usually entails evaluating your financial condition, determining what you want your money to do for you (both now and in the future), and assisting you in developing a strategy to get there. Financial advisors will assist you with cutting expenses, eliminating debt, and planning and preparing for the future.

Financial consultants, on the other hand, are close to doctors: Some are professionals in particular disciplines, such as taxation or wealth management. Others, such as licensed financial advisors, are generalists and can help with everything from budgeting to investments to insurance to tax plans.

Do you need a financial planner?

In general, the more difficult your financial situation is, the more likely it is that you will benefit from the services of a financial advisor. 

If your investments are clear, you might be able to save money by handling it yourself. Financial advisors, on the other hand, will provide an impartial viewpoint and insight when it comes to deciding how to spend your assets, what your financial goals should be, and what kind of insurance policies and other protections you need. When you're going through a big life transition, such as marriage, divorce, or inheriting wealth, a financial planner may be particularly useful.

Types of financial planners

Your preferences, life stage, and budget will determine which style of financial planner is right for you. We'll go over a few choices in more depth below. 


If you're just getting started, a robo-advisor might be all you need. Traditional firms like Vanguard and Fidelity, as well as online-only firms like Betterment and Wealthfront, have significantly reduced the cost of fund management thanks to automation.  These firms are perfect if you only want wealth management rather than comprehensive financial planning.

For a nominal price, robo-advisors create and maintain a portfolio of low-cost assets tailored to your financial goals — many of the best options charge 0.25 percent or less of your account balance. A machine algorithm determines the investment blend, which is automatically modified as desired. You will start saving with $500 or even less in a simple account.

The low-cost, simple-to-use nature of robo-advisors lowers the obstacles to achieving your financial goals. This is critical since missing the economy risks starvation in retirement. You can begin with a robo-advisor and then add a human advisor if necessary.

Traditional, in-person financial planners

A conventional, in-person financial planner could be a better choice for those with complex or continuing preparation needs. For the most complicated financial cases, a CFP may offer holistic, one-on-one consultation. A provider with the official CFP certification has undergone a comprehensive standardized training and assessment phase.

A fee-only CFP normally charges by the hour (usually $200 to $400) or by the job (for example, a flat $1,000 to $3,000 fee). Some will charge a premium depending on the value of the investment fund they control for you; this is known as an assets-under-management fee, and it is usually 1% of the portfolio balance each year. In most cases, the first meeting to address your needs and their services is free.

Until you start a relationship, find out if the person you're thinking about is a fiduciary, which means they have a legal obligation to put the client's best interests first.

Online financial planning services

There are a range of online planning platforms that integrate computer-assisted wealth management and direct access to live financial advisors. In certain situations, you'll be appointed a personal financial adviser and receive a detailed financial plan, but you'll connect with the professional over the phone or by video conference rather than in person.

This method of online financial planning normally costs more than a robo-advisor but less than a conventional financial planner. 

Financial advisors vs. financial planners

The most important distinction between financial advisors and financial consultants is that the word "financial adviser" applies to all advisors. A "financial advisor" is someone who gives comprehensive financial advice and typically has a particular credential, such as CFP.

However, there is no law prohibiting someone from calling themselves a financial advisor without a certificate, which is why it's important to learn about a financial professional's certifications or licenses before consulting with them.

Working with a financial planner

Digital visits, presentations, and even the opportunity to test-drive an investing program are popular features of online financial managers such as robo-advisors or online planning services. You will be able to consult with your dedicated financial manager before signing up for an online planning program.

An first meeting with a financial planner is equivalent to a first date: it's an opportunity to get to know one another and see if you have similar principles and beliefs. Take advantage of this chance to learn all you can, such as how much you can afford to spend, how the financial arrangement will be presented, and how much you can expect to hear from us in the future.

When you work with a CFP or an online planning service, you'll start by assessing your current situation. You'll be quizzed on:
  • The objectives. What are your financial priorities in the short and long term?
  • The present financial situation. How much money comes in and how much money leaves? How much do you own and how much do you owe?
  • The danger appetite. This collection of questions about how stock market gyrations make you feel lets you find out how much of your portfolio should be in stocks or other assets like bonds.

Any financial advisor can keep in touch with you on a daily basis, but the manner in which they do so can vary. Robo-advisors give you emails and account updates on a daily basis, while online consulting providers and conventional planners meet with you during the year. Some improvements in your financial condition should be mentioned in your calendar. 

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