Whether you’re saving for your child’s education or putting money away for retirement, financial planning is a complex process. Between a barrage of confusing terminology and economic turbulence, these decisions can be intimidating for someone who is new to the world of finance.
There are plenty of professionals out there who can help you make and manage these decisions, but if you’re new to long-term savings, how do you know if professional financial help is right for you?
We talked with Jason Gentile, Certified Financial Planner and Financial Advisor at Symmetry Partners in Connecticut about the questions you should ask when determining whether professional financial help is the correct route for you and your money.
Ask yourself two questions
“There are a few key questions an individual should ask,” Gentile says.
1. Do I have a high enough level of knowledge to do this myself?
“Many people have had no exposure to investment education,” Gentile says. “It has not been taught in our grade schools or high schools as a standard course. In fact, unless you chose a major in college that had something to do with finance or economics, you may have graduated college with no exposure. TV and periodicals are no substitute for true education here.”
2. Do I have enough time to do this?
“We all lead busy lives,” Gentile says. “Between work and family there isn’t much time to focus on our finances. We may jumble together some assets in our 401k and save money based on a rule of thumb we have heard, but that is not a plan.”
Benefits of professional financial help
“The obvious benefit of using a planner is for their expertise,” Gentile says. “A planner or advisor can help you create a realistic view of your goals and finances. They look at your overall plan and examine your savings rates, goals, insurance protection, estate plan and put you on your best path.”
Why consumers resist professional financial help
“We are a nation of outsourcers,” Gentile says. “If there is something we can’t do or don’t have time to do we have someone else (an expert) do it. We all go to doctors, dentists, get haircuts, use plumbers and electricians. Why do some of us not want to do it with our finances? For many people it comes down to fees and trust.”
At the end of the day, Gentile says, there’s no way to get out of the payment part. “You will need to pay an advisor or planner. A typical fee might be 1% of assets under management or a flat fee for building a plan.”
In addition to cost, many consumers are also hesitant to hire a financial professional because of the trust factor. Gentile recommends seeking a credentialed planner. “The Certified Financial Planner Certification (CFP) is the highest standard in the profession. You can use their website www.cfp.net to find planners in your area. Interview two or there of them to get comfortable with how they work and what they charge. Ask them questions about their education, experience, expertise and investment strategy. A great list of resources can be found at the Financial Planning Association’s website.”
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