DIY or Not: Should I Get a Financial Planner?
Sometimes it’s heaven to have someone do it all for you.
We like to have our cuticles pushed back by a professional while we read a magazine. Sometimes it’s nice to have dinner prepared by a chef and wine poured by a server. And while we can surely wing it a bit on our own when it comes to our hair, sometimes we just need a pro.
That applies to money, too. We encourage all women to be in full control of their money and always know what’s going on with their finances. But wouldn’t it be nice if someone could just give you all the answers, maybe even make bank runs for you?
In this edition of our DIY or Not series, we asked LearnVest’s in-house Certified Financial PlannerTM, Lauren Lyons Cole, when we should bring our money questions to an expert, and when it’s okay to take care of your money yourself. Read on for her straightforward, insider’s take.
Call Me If:
You’ve Just Hit the Jackpot
Windfalls like lottery winnings (not so likely) or lawsuits and inheritances (more likely) are great times to speak with a planner to maximize your lump sum. If you’ve reached a new salary level and are making six figures for the first time, it’s also a great time to seek out a planner.
If you have a lot of “dumb” questions, you’ll want to ask someone you feel comfortable with.
You Have an Aging Parent
Many of us will have to take care of our parents and their finances at some point in our lives, which can be tricky. Finding a planner you trust can be a wonderful way to deal with aging parents. Estate planning details, long-term care insurance, life insurance…all these things are better left to a professional.
You’re Prepared to Put in Effort
If you decide to work with an affordable planner that charges by the hour, you’ll have someone to answer your questions and put you on the right track. But getting to your goals will still require a level of commitment and willingness to put in the work. (You know, like following that plan.) They won’t be handling everything for you. Or…
You Have More Than $250,000
If you are one of the lucky few who needs to figure out what to do with a large nest egg, you might want a professional helping you out. Many planners use a “concierge” approach for wealthier clients, in which they take care of all their financial tasks (sometimes even to the point of depositing checks for them). That level of service is more expensive and the kind of planners who take a hands-on, long-term approach often require a minimum of $250,000 to $500,00–or even more–in investable assets. (That means cash in the bank, not the value of your home.)
Don’t Call Me If:
You’re on the Right Track
Some people are on the right path and doing the right thing on their own. At various points everyone can benefit from using a CFP, but if you’re coasting along and have everything in order, then go with it. (Make sure it stays that way with LV’s monthly financial to-dos.)
For someone who is deep in debt, a good resource is the National Foundation for Credit Counseling. Credit counselors will be more effective in helping you handle this issue. After all, that’s what they’re there for.
Maybe Call Me If:
You Want a Basic Financial Roadmap
If you are interested in creating a basic financial roadmap, you could always work with someone who charges an hourly rate. There aren’t a lot of them, but you can start by looking on the Garrett Planning Network, a great resource.
Travel on Budget
Get Lauren’s advice on how to make travel work for your budget
You’ve Had a Big Life Change
If you’re undergoing a major life change like getting married, having a baby, changing jobs, or dealing with a major illness, it might be a good time to consider working with a financial planner. Talking to a neutral third party about strategies for combining finances makes a lot of sense, as does planning for your new baby’s college education 18 years down the road. (To find out how to prepare for a baby, use the LV checklist.)
RELATED: How to Choose a Financial Planner
Find Your Perfect Planner
2. Try to find a female CFP. The Allianz “Women, Money, And Power” study showed that women often prefer working with female financial planners because they tend to be more caring and understanding.
3. Find a good match. You want to screen a financial planner the same way you would screen a therapist. You need to click with your CFP. For example, if you have a lot of “dumb” questions, you need to find someone you’ll feel comfortable asking.
4. Check their credentials. You also want to find someone who has credentials you can trust and who strikes you as intelligent. Look for certifications like Certified Financial PlannerTM, Chartered Financial Consultant (ChFC), or Personal Financial Specialist (CPA/PFS).
5. Know your questions ahead of time. Rates vary by geographic location and the experience and credentials of the planner, but if you decide to go with hourly service, you’ll pay somewhere from $150 to $350 per hour. Knowing that, it’s important to come prepared to a meeting so you don’t waste your money and your planner’s time. When meeting with a CFP for the first time, bring all of your financial information with you…everything from a pay stub to your mortgage documents (and everything in between).