We’ve all read those cautionary tales about lucky people who were catapulted to the millionaire’s circle by way of lottery winnings, game shows, or inheritances only to lose their fortunes just as quickly.
It seems they just didn’t have a clue about how to manage their newfound wealth. And while most of us think this could never happen to us, we’ve all had financial missteps that could have been avoided if only we’d had the right information and advice. And as our lives become more complicated, it’s easy to second guess our decisions about what it takes to build financial security.
Those who keep and build their wealth to millionaire status don’t do it by accident—they have a plan and they stick with it. If you’re in need of starting or honing your financial picture, now may be the perfect time to start working with a Certified Financial Planner. It’s the best way to make sure you’re on track to handle the financial challenges life throws your way.
Financial Planning—It’s More Than Numbers
Financial planners are not only prized for their financial knowledge, but for how well they get to know you. An effective adviser will take the time to understand your goals, risk tolerance, and general spending and saving habits.
Without this information, putting an appropriate financial program into place is like mapping out a game plan without knowing the players on your team.
Many turn to financial planners for:
A voice of reason. Melodramatic financial news may be great for ratings, but breathless reporting is often short on useful guidance for your own situation. A financial planner who understands your personal goals can tell you exactly what to do in this or any market environment.
Motivation. Sometimes it’s hard to manage even the most important items on your financial to-do list such as creating a will, buying life insurance or rolling over an old 401(k) plan. A financial planner will help you along by setting deadlines and checking to see how you’re coming along.
Setting priorities. Feel like you’re caught in a tug-of-war between competing goals like retirement and college planning? A financial planner can help you set priorities and then decide how to allocate your resources.
Getting Started: It’s Easier Than You Think
Most people find that working with a financial planner is refreshingly simple. After being acquainted, your planner will gather detailed information about you such as:
- Employer’s retirement options
After discussing and prioritizing your goals, the planner will begin recommending specific actions you should take to start making progress toward your goals.
In a typical planning relationship, you’ll meet with your financial planner three or four times a year to share new information, discuss your progress and identify any new steps you should take.
How to Choose a Planner
Before working with a financial planner, you have one last decision to make on your own: choosing the right planner. To narrow your choices, focus initially on two key criteria:
Believe it or not, anyone can call themselves a financial planner. To boost your confidence level, consider only Certified Financial PlannerTM practitioners. Planners who’ve acquired this credential have passed a broad, 10-hour examination, promise to adhere to a code of ethics, and meet continuing education requirements.
Some planners are paid from commissions earned by selling you the products they recommend. These arrangements could lead to conflicts of interest that could steer the planner’s advice toward more lucrative products. Choose a planner who charges a stated hourly or annual fee.
Originally published on USAA