It might surprise people that my husband and I pay a financial planner, given that I spend a lot of time on financial, tax, and investment planning at work. However, hiring a planner brought a return that cannot be quantified: peace of mind.
Here are some top reasons we pay for financial advice.
1) We wanted a second opinion on a few important decisions.
I wanted a different perspective on less familiar topics, like employer inventory management and whether or not long-term care insurance is necessary. We could have handled both of these issues on our own, but professional advice helped us move forward with more confidence.
2) We found an economic model adapted to our situation.
We were pleased to find a financial planning company that could work with us on an hourly basis to answer our specific questions, rather than for ongoing portfolio management. Paying for financial advice on an ongoing basis, through an asset management fee or other arrangement, may work for some people. Shop around to find a business model that fits the type and level of service you need. This requires clarifying what you want.
Most holistic financial planners, including ours, are not comfortable answering questions without fully understanding your financial situation. My question about long-term care insurance seemed simple, but our planner could only confidently answer if she understood our retirement assets, Social Security expectations, and anticipated expenses in retirement. A good quality planner needs time to look at your overall situation before giving answers. (I consider it a red flag if a planner is willing to give targeted advice without a full review.) This can mean higher fees than expected.
3) It gave us an impetus to get organized and stay organized.
A holistic financial planner also requires you to share a lot of information: statements of all your financial accounts, tax returns, pay stubs, etc. If you pay by the hour, it’s in your best interest to gather all of this documentation yourself rather than returning piles of disorganized paperwork. Gathering the documents was not an easy task, but I was able to eliminate a lot of financial documents through this process. This initial organizational blitz has continued to pay off: we only keep a small stack of financial documents and can easily access everything we need.
4) We like to have a succession plan.
As an unexpected benefit of working with a planner, they now have up-to-date information on every financial relationship we have: our bank accounts, company retirement plans and IRAs, and insurance policies. Our accounts are linked to the firm’s financial planning portal so our planner can see what’s happening there in real time, without the need for new documents. Any of the company’s planners could also access our information in the blink of an eye. If something happened to us, our loved ones would have a unique resource to help them deal with the problem. You can keep scrupulous records and develop your own estate plan, but storing all of our documentation with a third party helps alleviate concerns about damaged or lost records.
