For many small-business owners, the demands of running a business leave little time for managing their personal finances. This is why owners can often benefit from the advice and assistance of a personal financial planner – a trained professional who helps individuals plan and manage all aspects of their financial lives.
Financial planners can offer guidance in a number of different areas, including retirement, investing, tax and estate planning, and business succession planning. The outside perspective and expertise of a personal financial planner can be invaluable in helping any individual reach his or her short- and long-term financial goals – especially business owners, who may have significant personal net worth but little time for, or expertise in, managing their personal finances.
What Is A Financial Planner?
For starters, it’s important to understand what a financial planner is not.
For example, a financial planner is not a stockbroker, insurance agent or investment advisor. Unlike these professionals, financial planners are not regulated, which makes it important to be careful when choosing a planner.
Though they aren’t regulated, there is a professional designation for personal financial planners: the Certified Financial Planner™ or CFP® practitioner. This is an individual who has met the Certified Financial Planner Board of Standard’s education, examination and experience requirements; agreed to adhere to high standards of ethical conduct; and completed the CFP Board’s biennial certification requirements.
How Can A Financial Planner Help You?
A financial planner should take a broad look at your overall financial situation and then focus on your needs before recommending a course of action.
This is in contrast to a stockbroker, for example, who focuses on just one specific area of your financial life and may recommend investments for which he or she will receive a commission.
Specific tasks a financial planner can help you with include:
- Getting started – This is the hardest part for many people when it comes to financial planning. Hiring a financial planner will help provide the motivation for getting your personal financial house in order.
- Establishing financial priorities – Everyone is faced with many different financial priorities that are all screaming for attention: children’s college educations, retirement, caring for aging parents, etc. A financial planner can help you decide which ones are most important for you at different stages of your life.
- Setting measurable and realistic goals – Financial goals should be specific and measurable, and they should have deadlines and timeframes associated with them. A financial planner can help you identify goals and priorities and create a plan for achieving them.
- Understanding the big picture – Individuals often make financial decisions without regard to the cumulative effect on their overall situation. A financial planner can work with you to create an overall plan that takes into account your financial big picture.
- Re-evaluating as necessary – Financial planning is a dynamic process, since your goals change over time because of changes in your life stage and circumstances (marriage, children, jobs, inheritance, etc.). A financial planner will help you revise your plan as necessary to reflect these and other changes.
How To Choose A Planner
Most will provide an initial one-hour consultation free of charge. Here are some questions you should ask potential planners during this consultation:
- What are your areas of specialization?
- How long have you been offering financial planning advice to clients?
- What financial planning designation(s) or certification(s) and licenses (e.g., Securities, CPA) do you hold?
- What financial planning continuing education requirements do you fulfill?
- Describe your approach to financial planning.
- Who will work with me – yourself or an associate? Will the same individual(s) review my financial situation?
- How are you paid for your services? Is any of your compensation based on selling products, or do you have a business affiliation with any company whose products or services you are recommending?
(Posted September 2008)
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