Tag Archives: Financial Consultant

When Should You Hire a Financial Planner

Old CoupleYour financial security is important.

To you. Your spouse. Your family.

But trusting a stranger with your hard-earned savings is challenging. How should you choose?

First, let’s ask when you should hire a financial planner? Your first job? Out of college. Once you saved a little nest egg?

There are five signs, according U.S. News & World Report, that you need a financial planner:

  1. Uncle Sam sends you a tax refund check every year,
  2. You already are investing your money, but you have no idea how much it is costing you annually,
  3. Everything is going great when the bulls are raging down Wall Street, but you don’t have the expertise or strategy to survive a bear market.
  4. You are saving money every year, but you don’t know if you are saving enough to meet your retirement goals.
  5. You have a spouse, four kids and two dogs, but you have never set up a plan to keep them financially safe should you die.

These are five good signs to spur you to investigate hiring a financial planner. In reality, once you are out in the workforce on your own, you should meet with a financial planner and set goals. The younger you are when you develop a financial plan the better you will be.

Take a 21-year-old who invests $2,000 for nine years at 10 percent interest. By age 65, that $18,000 will be worth $736,000. However, if you wait until age 30 to start saving $2,000 a year every year until age 65 ($70,000), you will only have $542,000.

You will lose $220,000 compared to starting at age 21.

That is the power of compound interest.

It is better to work with financial planner when you are young, but whatever age you are you should find one you trust with a good track record.

What separates financial planners from other financial planners? There are many different types, but which one is best for you:

  • Certified Financial Planners
  • Certified Public Accountants
  • Enrolled Agent
  • Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC)
  • Certified Fund Specialist (CFS) and Chartered Mutual Fund Counselor (CMFC)

You should begin with a Certified FInancial Planner who gave look at all your financial needs and develop a plan to meet them. CFPs  have the most rounded financial education plus they need to have at least three years of job experience in the financial planning industry before they take the CFP board exam which covers financial issues such as insurance, retirement, estate planning and investing. The CFP test is 10 hour.

If you need someone to do your taxes,  a CPA has more rigorous training, but an Enrolled Agent also can do the job and cost less. A Chartered Financial Analyst is good if you want to set up a hedge fund, but most people don’t go that rout.

The CLU and ChFC are good choices if you need life insurance, estate planning and other financial issues, but they don’t have to take rigorous board exams for their certification.

What separates us from other financial planners?.