Tag Archives: financial planning

What Do Financial Planners Do?

The primary role of a financial planner is to create projections and plans that will show you decisions you should be making that will assist you to achieve financial success over the long-term.

Some factors may include paying extra into your mortgage or putting any extra cash into an RRSP in Canada or 401(k) plan in the US. Other factors include the type of insurance you need, or should you be refinancing? Should you be buying stocks or using mutual funds? A financial planner can answer these questions.

Read more on “How to Choose a Financial Planner

How Do Financial Planners Answer Your Questions?

A financial planner will collect financial statements and gather information and then put this into a software that will project results over the following years. In the way of running a number “what if” scenarios, your financial planner is able to identify the decision sets which will result in the best outcomes for your unique situation. These comparisons and projections are then used by a financial planner in order to answer questions that include:

  • How much money do you need to be saving?
  • What type of investments should you be involved in?
  • How can you protect your savings from bad markets?
  • Should you be using any extra funds to pay off a mortgage faster, or should you be placing it into your 401(k) plan?
  • What type of income can you expect once you retire?
  • Should you be keeping your life insurance policies?
  • How is inflation going to affect your retirement lifestyle?
  • What amount will you be able to withdraw in this year?
  • When will you be able to retire?

Some of the above questions are not so easy to answer. Looking ahead to 30 years into you future can be an exercise that is rather daunting. The important factor is to keep in mind that the financial advisor is working with many moving parts. You need to experiment with moving parts along with creating “what if” scenarios. It is these types of scenarios that will assist you in seeing what you can expect from your finances in 5, 10 or even 20 years on.

Financial Planners Can Help You To Stay Focused

lens image - staying focused

Once you have your financial projection, you need to leave the things you are unable to control such as what the stock markets did today and rather focus your attention on things you are able to control.

Here are some of the ways that financial planners can assist you with focusing on the factors that will actually make the difference.

  • If you have concerns about losing a job, you could save additional funds in a dedicated emergency-fund. This will mean if you do lose the security of a job, you will have more than enough time in order to regroup.
  • Do you have concerns about inflation? Social Security will offer inflation-adjusted lifelong income. In addition, if you are married you can often achieve additional benefits when you strategically make the decision on when each partner should start taking benefits.
  • Are you worried about investment markets? You are able to make choices in guaranteed and safe investments, or using time-segmented approached to investing, which can free you from the worries about inevitable ups or downs in the different markets.

A good financial planner will facilitate conversations on all these different aspects.

They will offer you with objective advice as well as educate you on choices that are currently available. Good financial planners will never begin by showing you brochures about investments.

Do Financial Planners Sell Insurance And Stocks?

After over two decades as a professional financial planner, I have come to realize that when a person starts asking me what my job involves, and I tell them I am a financial-planner, many of them are still under the impression that I sell things like insurance or investments. I have an understanding why there are many people that think that financial planners are into selling things. Out of the 350,000 financial planners across the country, many of them in fact over 90% receive commission in some way from the products that they sell.

Yet there is a financial planner group, which makes up about 10% of this industry, that are not in the business of selling stocks or products. They might manage your investments for you, but they do not get payments for selling you investments. These types of financial planners are known as “no commission planner” or “fee-only financial planner”.

Financial Planners Might Have Specialties

The area that we specialize in involves planning for individuals that are 55 or even older that are within 10 years of the desired retirement-age. We also work with individuals across the country with the use of web-based technology along with screen-sharing. Certain planners will focus on assisting people with funding their kid’s retirement. While others are focused on the retirement plans associated with businesses.

There are also financial planners that are focused on dentists or doctors or to assist younger families to begin savings plans. It is essential to ask your financial planner to tell you about their usual clients. Make sure you are working with the planner that specializes in what you need.

If you are close to retirement and you would like to find out more information on what financial planners are able to help you with, you need to contact different financial planners and then work with the one that accommodates you the best.