Many people have misconceptions about financial planning that hold them back from meeting with an advisor. Perhaps they feel that they are too busy, they have had negative experiences with advisors in the past, or they feel that they know enough to do it themselves.
Whatever the reason, consider this: Americans with a long-term financial plan are more than twice as likely to feel “very confident” about reaching their financial goals*. Meeting with a planner can guarantee a financial plan that ensures peace of mind now and financial stability in the future.
This being said, here are four common misconceptions people have about financial planning that may prevent them from enjoying the benefits of this service.
Financial Planners are Only in It for the Money
A little bit of cynicism is always healthy in the financial world. You may be a bit wary of financial advisors because you have heard of, or even interacted with, advisors who are unethical or cost people a lot of money. As you choose a financial advisor, investigate their qualifications and how they are compensated for their services. Fee-only advisors are only ever paid by the client and will never try to sell you anything. This compensation system allows for the adviser’s financial incentives to align with yours. You can find more details about this in our article Fee-Only Financial Planning vs. Fee-Based and Commission-Based: What’s the Difference?
When working with a properly qualified, fee-only advisor, you can be more confident that you are receiving honest and ethical advice that will secure your financial future.
It’s All About Your Investment Portfolio
People often associate financial planning with creating and keeping a balanced portfolio. Although this is one important aspect of having a good financial plan, an expert financial planner assists you in every aspect of your financial life. This includes estate planning, retirement planning, budgeting, college-saving, insurance, and more.
With this understanding, it is clear that adequate financial planning requires a breadth of knowledge that is difficult to achieve by doing research on your own. For this reason, even avid do-it-yourselfers will admit that meeting with a financial planner can save valuable time and money.
I Have Plenty of Time to Plan- It Can Wait
The hustle and bustle of daily life can cause you to focus more on your immediate needs than your future financial goals.
In these moments, large financial transitions like retirement can seem ages away. However, your potential retirement savings increase exponentially the earlier you start saving. The longer you wait to start saving, the more you will have to save and the more sacrifices you will have to make to reach your retirement goals. For example, if you saved $1000 per month for 20 years at 8% interest, you would end with almost $600,000. If you did the same for 40 years, you would have almost $3.5 million saved. Your deposited money would have multiplied by more than seven times. Thus, the most important step you can take to retire wealthy is to start now. When it comes to retirement savings, starting early facilitates more savings and greater peace of mind.
This principle also applies to other major life transitions like marriage, sending children to college, moving, etc. Although meeting with a planner now may feel like one more thing on your already-full plate, it will greatly decrease your stress in the long-run.
All I Need Is a Plan and I’m Good to Go
Creating your financial plan is only the first step in securing your financial future. Just as you visit a doctor for routine check-ups to ensure good health, your financial health needs consistent monitoring and updating. A financial advisor helps you create a financial plan, they hold you accountable for that plan, monitor changing environments and circumstances, and make needed adjustments as you proceed through life.
As life changes, so will your financial plan. Stay on top of your financial future by meeting with a fee-only financial advisor.