It may surprise people that my husband and I pay a financial planner, given that I spend a lot of time on financial, tax, and investment planning at work. However, hiring a planner has generated a benefit that cannot be quantified: peace of mind.
These are some of the key reasons we pay for financial advice.
1) We wanted a second opinion on some important decisions.
I wanted a different perspective on less familiar topics, like handling employer actions and whether we needed long-term care insurance. We could have faced both problems on our own, but having professional guidance helped us move forward with more confidence.
2) We find a business model that makes sense for our situation.
We were delighted to find a financial planning firm that could work with us on an hourly basis to address our specific questions, rather than ongoing portfolio management. Paying for financial advice on an ongoing basis, through an asset management fee or other arrangement, may be suitable for some people. Shop around to find a business model that fits the type and level of service you need. This requires clarity about what you want.
Most holistic financial planners, including ours, are uncomfortable answering questions without fully understanding your financial situation. My question about long-term care insurance seemed simple, but our planner could only answer with confidence if she understood our retirement assets, expected Social Security, and expected spending in retirement. A good quality planner needs time to review the entire situation before providing answers. (I consider it a red flag if a planner is willing to provide specific advice without a thorough review.) That may mean more fees than anticipated.
3) It gave us a boost to get organized and stay organized.
A holistic financial planner also requires you to share a lot of information: statements from all your financial accounts, tax returns, pay stubs, etc. If you pay by the hour, you’ll want to gather all that documentation yourself rather than handing over piles of disorganized paperwork. Gathering the documents was not an easy job, but I was able to eliminate a lot of financial paperwork through that process. That initial organizational blitz has continued to pay dividends: we keep only a small sheaf of financial documents and can easily access anything we need.
4) We love having a succession plan.
As an unexpected benefit of working with a planner, they now have up-to-date information about every financial relationship we have: our bank accounts, company retirement and IRA plans, and insurance policies. Our accounts are linked to the company’s financial planning portal so our planner can see what’s happening with them in real time, without the need for new documents. Any of the company’s planners could also access our information if necessary. If something were to happen to us, our loved ones would have a comprehensive resource to help them figure things out. You can keep scrupulous records and develop your own estate plan, but storing all of our documentation with a third party helps alleviate concerns about damage or loss of records.