Why Don’t More People Hire Financial Planners?
I have been a financial advisor/planner for over 27 years and I have posed and heard this question many times myself. Financial planners have more experience and knowledge about investing money and ensuring the money you saved will last you through your whole retirement than an average person. When it comes to other professional advice, we rarely hesitate going to a doctor for medical advice, or to a lawyer to help us with a legal issue. So why is hiring a professional to advise on our savings still an issue? Here are the top reasons I have heard when I talk to people about why they didn’t already have a financial planner.
Reason #1: “I don’t have enough money”
How do you know? Many planners do have investment minimums for taking on a new client but many do not. You don’t know until you ask! Also many planners who do have minimums either work with planners who have lower investment minimums or would be willing to refer you to another planner in the area. We often take on clients who are just getting started or are well below our minimums today, but are serious about their financial situation and are working hard to improve it. They will grow to be ideal clients in the future if they are given the proper guidance now.
Reason #2: “I don’t want to be judged or embarrassed”
Most planners follow a basic rule: what happened in the past is the past. It doesn’t matter what you did. It matters what you do from this point forward to improve your situation. A good financial planner will want to understand your past decisions to get a better insight into understanding your thought process. They will then use this knowledge to better educate you about making future decisions. Don’t be embarrassed! As a matter of fact, some of the best financial planners I know at one time or another made financial mistakes themselves. This past experience actually made them better and more empathetic planners.
Reason #3: “I can’t afford a financial planner” or “they are too expensive”
Why do you think that? Have you met with a financial planner and asked the question? Most financial planners charge asset based fees on the money they manage for you. This fee is typically around the 1% range per year and in most cases is deducted right out of the investment accounts. Is that too much? I guess it comes down to the value you are getting in return. There have been several studies and white papers on this topic suggesting a good advisor more than pays for him/herself, especially if they are doing comprehensive financial planning and not just asset management.
Reason #4: “I don’t know how to find a good financial planner”
The best way to start is to ask your family and friends and see if they have a referral for you. If this doesn’t work, then go to www.CFP.org and use their planner search feature. I would typically interview a few planners and find the right fit for you. When you find a good planner, the relationship may last a lifetime so it is important to feel good about your choice!
The relationship with a good financial planner should bring a significant amount of clarity to your financial goals. It should be able to create a solid framework for all future financial decisions. It should also give you a tremendous amount of confidence to know you have a trusted partner who is working side by side with you and your family. Many people view meeting with a Financial Planner like going to the dentist - they know it's necessary but they aren't looking forward to the appointment. Most are surprised they come out feeling good even if they sometimes dreaded the conversations we needed to have. We want you to think of these meetings as “Happy Hour,” where you leave feeling better than when you arrived. My advice to you is to find a good financial planner and “Get your Happy Hour Started!”