Have you ever considered employing the services of a financial planner? If yes, then you’ve probably asked yourself the question: “are financial planners worth it?” or, more aptly, “are financial planners worth the cost?“. The answer likely depends on your unique situation. Let’s check out some reasons for and against retaining a financial planner. You can then decide if a financial planner would be a good fit to help guide you along.
Financial Planners: Yes, You Should
- Too Busy - A majority of us are constantly strapped for time. Trying to balance career, family, friends, errands, etc. doesn’t leave time for much else it often seems. Staying on top of your retirement planning and other investments might get neglected when life is pulling you every which way. You can benefit from a financial planner by letting them do a portion of the legwork which will ultimately save you time.
- Lots of Money to Invest – If you have gobs of money sitting around then a financial planner might be what the doctor ordered to make sure you’re achieving your goals. A financial planner can ensure your large sums of money are properly diversified and invested appropriately in order to hopefully get the best return.
- A Combination of Too Busy and Lots of Money – If you are well-endowed (financially speaking – get your mind out of the gutter!) and a super busy person (a combination of the first two points above), then all the more reason to entertain the idea of using a financial planner. Someone in this category might be a wealthy business owner who spends long hours running and focusing on his company. Essentially “outsourcing” your financial planning could be wise.
- Completely Overwhelmed & Uneducated – Another reason a financial planner could be of benefit is if you just don’t know anything about the world of personal finance. If the thought of stocks, bonds, mutual funds, Roth IRAs, 401(k)’s, etc. make your head spin and overwhelm you, don’t be ashamed. A financial planner can help guide you along and even teach you some of the basics through your discussions or by literature they provide to you.
- Trying to do more Complicated Investments – You may want to consider using a financial planner if you are attempting to do more complex investments. If this is the case, be sure the financial planner is competent and experienced enough to be able to handle the task at hand. A lawyer or accountant might also be needed if the investment opportunity is really complicated (especially for tax planning purposes).
Financial Planners: No, Please Refrain
- Fees – Financial planners come with a cost. They will charge you fees for their services. While the fee structures will vary between different financial planners, avoiding the fees is a major reason not to use a financial planner. The money you would have spent on fees can be used to invest elsewhere.
- Educate Yourself – These days, you can find information on just about any investment alternative out there. All you have to do is a quick Google search and you’ll discover an abundance of resources. Taking the time to teach yourself means you have less need for a financial planner.
- Investment Goals – What are your investment goals? If they’re simple objectives, then you shouldn’t need a financial planner. For example, let’s say all you want to do is save for retirement in a Roth IRA. A simple approach would be to funnel your money into a low cost index fund within that Roth IRA. Just set up automatic monthly contributions and then be on your merry way – no financial planner needed!
- More Satisfying Yourself – Taking the initiative to run your own financial planning can be gratifying. Doing the necessary research, planning, monitoring, re-assessment, and so on will provide an intrinsic reward that you wouldn’t achieve through a financial planner.
The Verdict: Are Financial Planners Worth it?
As you can see, the decision to utilize a financial planner really depends on your situation. In the end, it boils down to whether or not the costs you’ll incur for a financial planner are deemed worth the services provided. Remember, there’s no guarantee of a better return on your investments by using a financial planner. In fact, technically there’s no guarantee for any return at all! You will need to weigh the pros and cons and decide if a financial planner is right for you.
What About Me?
In case you are curious, I’ve never used a financial planner and I don’t have any plans to ever do so. I feel I have a solid grasp on what I need to do to achieve my financial goals. If I’m ever curious about an investment option or strategy, I have confidence in my ability to attain solid understanding via my own research (that is, educate myself). Paying someone else to provide advice on where I should invest does not seem worth the cost I’d have to pay. Keep in mind, this is just my personal circumstance (I have an MBA after all!). The only way I could see myself using a financial planner in the future is if I somehow strike it wildly rich and have so much money and too little time to manage it all
Do you or have you used a financial planner? If yes, what are your experiences? If you haven’t used a financial planner previously, would you ever consider employing one?