Financial Planners: How They Can Help You

Determining your financial life goals and achieving them is not easy, especially when you try to do it on your own. Not only do few people have the knowledge and skills required, it is difficult to set aside your emotions, dreams, and immediate desires to focus on creating a realistic plan that is in line with your resources and level of risk tolerance. A financial planner is a trained professional who helps people handle personal financial issues such as cash flow, investment and risk management, retirement and estate planning, and tax planning. Choosing the right person for you is essential; they must be someone you can trust, and who understands your needs, concerns, and future plans.

Financial planners may work for large brokerages and banks, through insurance franchises, or in small private firms. It is important to remember that anyone working for an institution that provides investment and banking services, or insurance products may have a vested interest in selling you on particular funds or schemes. This is not to say that you should distrust someone just because they work for a large financial institution, only that they should fully disclose any and all potential conflicts of interest. If they do not bring these issues up themselves, ask them explicitly and directly about whether and how they are rewarded for recruiting new investors or customers.

You should carefully interview a financial planner before making any decisions. A good planner will spend a considerable amount of time learning about your goals, current and future resources, and priorities. They will not try to immediately sell you a particular financial product, or pull out a "cookie-cutter" plan based on your age and income. Everyone needs a different financial plan, and a trustworthy planner will collect all of the information about your financial situation, as well as any relevant non-financial information (e.g., medical needs, or plans for having children in the future).

After this initial information gathering session, you will meet again, after they have analyzed the information provided. They will, most likely, present you with several different plans; often, there is no dream plan that can bring you everything you desire. Instead, they should offer different plans that highlight different goals. For example, one plan may highlight early retirement, while another ensures that you will save enough for your children's college education. They should not push one plan too hard, but rather present the pros and cons of each, and make sure you are choosing the plan that is best for you.

Once a plan is chosen, your planner will help you construct a path to realizing that plan. The path should provide a reasonable way of achieving your set goals, and be flexible enough to comfortably accommodate small to moderate life changes. Of course, buying an expensive home or a a sudden change of job with a sudden loss in salary might require creating an entirely new plan. Your financial planner cannot see the future, so you have to be willing to stick with the chosen path, or be prepared to create a new plan.

A thorough professional will make sure that all of key issues are addressed. They will assess your personal risk and liability, and make sure you have appropriate amounts and types of insurance. They will help you create a plan that provides a stable cash flow while generating capital for the future, and providing adequately for your retirement. They will show you ways to reduce your tax burden, thus making your assets grow faster. If you have children, spouse, or other dependents they will incorporate plans for their education and make sure they are provided for should something happen to you. They can help you set up trusts and bequests, and understand how such entities work. To the extent that it is reasonable, given your current and future assets, they will help you set time lines for major purchases, such as a new house or boat, or a once-in-a-lifetime vacation. If you own a business, they will also help you manage issues such as your personal stake in the business and estate succession.

You should plan on meeting with your financial planner at least once or twice a year, as well as after any major life changes. This will allow you and your planner to closely monitor your goals and your progress towards those goals. It is important that you trust your planner and can confide in him or her with good news or bad, so that they can best help you.

Financial planning is a rapidly growing industry, and has outgrown licensure and regulation boards in many countries. In the United States, for example, financial planners must be registered as an investment advisor first, belonging to an investment firm. To achieve the title of "Investment Advisor," an employee of such a firm must pass the Financial Industry Regulatory Authority (FINRA) Series 65 and Series 66 exams. However, these are considered "minimum competency" examinations. They do not indicate that a person has a high level of proficiency in investment advising. Furthermore, it does not qualify the person as a "financial planner," and they may not be skilled in all areas of financial planning.

In response to this problem the Financial Planning Association (FPA) created the "Certified Financial Planner" (CFP) designation. While anyone who has passed the basic exams can call themselves a financial planner, only a person who completed an approved college-level curriculum, has passed the CFP board exams, and has put in three years working in the financial planning business sector is entitled to call themselves a CFP. All CFPs must be recertified every two years, having completed 30 hours of continuing education to stay current in their field, and to ensure that they are familiar with the ethics policies of the Financial Planning Association. You can check a person's status with the FPA if you want to verify their credentials.

Although not everyone needs a financial planner, most of us do. If you have assets that you want to protect, family who need to be cared for despite any eventuality, or plans for the future that involve growing or evolving your assets, then you need a professional to help you see your plans through.

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