How to Use a Financial Planner Effectively

 

Whether you're saving for retirement, trying to get out of debt, or building wealth, a financial planner can be a great partner on your financial journey. The thing is, simply hiring a planner isn't enough; you need to know how to work with a planner if you want to maximize the benefits of his or her expertise.

In this article, we’ll cover the steps to choose the right financial planner, how to prepare for meetings, and how to collaborate effectively to achieve your financial aspirations.

What Is a Financial Planner?

A financial planner is an investment professional who assists individuals and families with managing their finances by advising on budgeting, investments, retirement planning, tax strategies, and so on. Depending on their certifications, planners may further specialize in estate planning, insurance, or debt management.

1. Choose the Right Financial Planner

First things first, in order to be able to actually work with a financial planner, you will need to pick one. Consider These Factors:

• Qualifications: Check for CFP, CFA, or CPA designations. 
• Fee Structure: Determine if you want a fee-only planner-a professional who takes no commissions, only upfront fees-or one who works on commission. 
• Specialization: Find an advisor who has experience in areas related to your financial goals, whether retirement planning or debt reduction.
• Fiduciary Duty: Ensure that the planner is a fiduciary, meaning being bound to act only for your interests.

2. Set Up Your Goals

Good financial planning operates under goals best.

Mute Questions to Consider

• What is important to me-what do I want to achieve in my lifetime?
• Will this goal require funding anytime soon or after an extended time?
• Do you foresee life-altering events-marriage, constructing a house, new venture, and such?

Pro Tip:

Write out your goals and prioritize them. Bring this first meeting with your financial planner. 

3. Prepare for Your First Meeting

To maximize the benefit of this first consultation, be prepared to bring in all relevant information.

What to Bring Along:

• Bank statements and credit card balances.
• A list of all debts: mortgages, student loans, etc.
• Recent pay stubs and tax returns.
• Investments, retirement accounts, and insurance policies.
• A budget or record of your monthly expenses.

4. Communicate Openly and Honestly

Your financial planner can only help if they have a complete understanding of your financial situation. Be honest about:

• Your income and expenses
• Any financial challenges or mistakes you have made
• Your comfort level with risk and various investment strategies.

Pro Tip:

Don't be afraid to ask questions or seek clarification. A good planner will ensure you understand advice provided.

5. Act on Recommendations

A financial planner may give you an extended plan, but it's your duty to carry through with the recommendations.

Common Recommendations:

• Adjusting your budget to meet savings goals.
• Consolidating or refinancing debt.
• Rebalancing your investment portfolio.
• Increasing contributions to retirement accounts.

Pro Tip:

Establish timelines for completion and set meetings periodically with your planner so that you will know exactly how you are staying on course.

6. Utilize Technology to Keep You on Track

Many financial planners provide apps and tools to help clients track their progress.

Ask Your Planner About:

• Online dashboards to track savings and investments.
• Budgeting or expense-tracking apps.
• Tools for analyzing your portfolio's performance. 

7. Schedule Regular Reviews

Your financial situation and goals may change over time, so regular reviews with your planner are important.

When to Schedule Reviews:

• Annually, to assess overall progress.
• After major life events, such as marriage, having a child, or changing jobs.
• When there are significant changes in the economy or financial markets.

8. Understand the Planner's Limitations

While the work of financial planners is very important, they cannot handle everything that pertains to finance.

What They Can Do:

• Help you create an overall financial plan.
• Provide investment and savings strategies.
• Offer tax-saving suggestions-if qualified.

What They Cannot Do:

• Guarantee investment returns.
• Replace legal advice from an attorney-estate planning, for example.
• Replace a certified tax professional for complex tax matters.

9. Stay Involved in Your Financial Journey

While it’s tempting to delegate all financial decisions to your planner, staying involved is crucial for long-term success.

How to Stay Involved:

• Educate yourself about basic financial concepts.
• Regularly review account statements and progress reports.
• Speak up if you’re uncomfortable with any advice or decisions.

10. Evaluate Your Financial Planner Regularly

The relationship should be mutually trusting and understood, each with an idea of what the other wants. If that is not what you are experiencing, then it's time to find an advisor. 

Questions to Ask:

• Is the advisor proactive about providing advice and information?
• Are strategies and options explained clearly?
• Are you making measurable progress toward your goals? 

Final Thoughts

A financial planner can do a complete revolution in your financial health but requires great involvement and communication in return. In that respect, by setting goals, staying organized, and going over your progress, you could truly optimize such a professional relationship.

Remember, the bottom line of a financial planner is to empower you to take charge of your finances and enable you to secure your future. And with an approach, you will head in the right direction toward success in finance.