As I became an adult and began making important financial decisions I began to wonder why even the basics of financial literacy were not covered in my many years of schooling; why I could not recall my family ever discussing finances; and why I did not personally know anyone who had seen a financial planner. That lack of financial education and exposure left me uncertain that the financial decisions I made would be the best choices. After experiencing this nagging uncertainty long enough, I decided to do something about it and sought the advice of a financial planner. Here are a few key points I wanted to share on how my husband and I went about finding a trusted advisor and the benefits we received from working with a financial expert.
First and foremost, it’s important to find a financial planner with whom you feel comfortable, who can meet your specific circumstances and whom you can trust.
Comfort: It’s important to feel comfortable with the financial planner because you’re sharing your life with them. A financial planner should be someone with whom you’re comfortable divulging some of your innermost insecurities about your finances that you typically wouldn’t share with anyone.
Fit Our Needs: Choose to work with an expert who can address your unique situation and not provide cookie-cutter, one-size-fits-all advice. For example, my husband and I have a combination of 1099 and W2 income, homeownership and investments. You want to pick someone who has had experience dealing with clients with many types of unique circumstances.
Trust: You may want to specifically choose a financial planner who is a fee-only fiduciary. Fee-only means that the planner only charges one fee for the service and does not add additional fees for product-based sales. Fiduciaries are obligated to act solely in the interest of their clients and as a result they have minimal conflicts of interests. More simply, this means that the client can rest assured that the planner is recommending a specific type of service and/or product because it will directly benefit the client and not because the planner will make a commission.
After finding a financial planner that you feel is the right fit, it’s time to dive and look at all your financial details. In our case, the planner helped us save money and avoid tax penalties.
Save Money: For example, the financial planner researched the fees associated with our existing retirement accounts and contrasted that with lower cost fund options. It can result in a long-term savings in the order of tens of thousands.
Avoid Tax Penalty: In our case, the financial planner also brought to our attention that we miscalculated estimated quarterly tax payments using the new tax law that took effect this year. To cover the shortfall, the advisor helped identify adjustments we could make in our financial plan, which in turn helped us avoid penalties for underpayment to Uncle Sam.
These are just a few of the benefits that hiring a financial planner can provide. For us, it made us more confident that we are making the best financial decisions specific to our unique financial needs.