Do you do your own financial planning, or do you seek the help of a professional financial planner? It is possible to do it capably yourself, but with the incredible variety and complexity of financial vehicles available today, you might be wise to seek a professional financial planner.
The training that one undergoes to become a Certified Financial Planner (CFP), Chartered Financial Advisor (CFA), or similarly rigorous certified consultant requires a solid cross training in all aspects of financial management. To achieve and maintain their certifications, they must pass extensive exams and keep their knowledge up-to-date with continuing education courses.
CFPs and CFAs generally meet the fiduciary standard – requiring them to act in your best interest and inform you of any potential conflicts of interest. Brokers and other varieties of financial advisors may meet the suitability standard instead – required to give you advice suitable to your situation, but not necessarily the best, and they may steer you toward specific financial products that brings them more compensation.
With the variety of financial planners, advisors, and brokers available, there is sure to be one available that meets your investment needs and your budget.
Financial planners provide significant value – and to their credit, some respondents to our recent MoneyTips survey understand the importance of financial planning and seek professional assistance. Those who do are overwhelmingly happy with their choice.
94% of baby boomers (those age 50 and above) and middle-income respondents (those with annual incomes between $40,000 and $80,000) who have financial advisors agreed that they were satisfied in their financial planner or investment advisor and completely trusted him or her. Not one respondent in either group said they totally disagreed with that assessment. Almost the same amount of respondents with financial planners, 92%, agreed that their advisor provided a variety of products that met all of their financial planning needs.
Financial planners were more popular with older respondents than with middle-income respondents. The number of baby boomers who said that they consult CFPs or investment counselors was the same percentage as those who educated themselves using online resources (44%). However, the middle-income respondents preferred online research (46%) with only 30% using CFPs or counselors. In both groups, less than 20% of online respondents used broadcast media sources for their information, and less than 10% used other means.
The survey did not break down the reasons for online investigation – whether or not a person was trying to do research in order to have more pertinent questions for their financial planner, or if they preferred to do all of their own financial planning. It does seem to imply that older respondents were more likely to use a financial planner, perhaps because they understand the increasing importance of financial planning or just are having poor success at doing it themselves and see that time is running out.
That result is a bit unsettling, because good financial planning is more effective in your youth – you have a longer time to build wealth and adjust to any complications. If you wait until too late, you may have to take on riskier strategies to meet your financial goals,
The most disturbing result was that one-third of all respondents do not have any sort of financial plan. 37% of the middle-income respondents and 32% of the baby boomers reported having no clear financial goals or plan. Being without a financial plan in your younger days is reckless, but being without a financial plan in your peak earnings years as you approach retirement, as many baby boomers are, is outright dangerous to your financial health.
If you fall in this category, you need to start now. It is always a good plan to start by educating yourself on the basics with some online research, but in the end, you are probably better off using a financial planner.
Take the time to investigate the type of financial planner that best suits your needs, verify their certifications and the standards they hold to, and check to see how they are compensated. After that, you should have no trouble finding the right financial advisor for you. If our poll results are any indication, you will be very glad that you did.