At the best of times, getting your finances in order can be a daunting task. Budgeting, not overspending, ensuring that you have an emergency fund, along with other tasks that good financial hygiene, can take considerable planning, discipline and commitment. However, these practices, though important to establish and maintain reasonable financial health, may not be enough if you have specific financial goals in mind.

Moreover, if you have already identified specific goals, such as being able to buy your dream house, taking a one-year sabbatical and travelling the world, or retiring early, you may need a cogent plan to get there. Further, and for those of us who try to be careful with our money, we can also be naive about money management, investment and wealth creation – until it is too late. This is when we could benefit from the services of an expert, such as a financial planner to broaden our horizons financially, and guide us to maximise what we have worked so hard to accumulate.

 

A Financial Planner versus a Financial Advisor

Although terminology might differ depending on where you live, there is a difference between a “financial planner” and a “financial advisor”. According to Investopedia,  

A financial planner is a professional who helps individuals and organizations create a strategy to meet long-term financial goals.

“Financial advisor” is a broader category that can also include brokers, money managers, insurance agents, or bankers.

In essence, financial advisors provide guidance to their clients on investments and financial matters, which may be based on the personalised plan laid out by a financial planner.

These financial plans can be extremely comprehensive and can range from improving a client’s current financial standing, through to retirement and planning for later in life. The scope, breadth and depth of the financial plan would be agreed upon by the financial planner and the client.

 

What Might Your Financial Plan Look Like?

As stated above, a financial plan would be based on your needs and imperatives, and so would be highly customised to your situation and does not necessarily have a template. However, experienced financial planners may have developed a systematic approach to help them properly address the needs of their clients. To that end and in order to assess your financial situation, in your initial conversations with a financial planner, topics that would be discussed include, but would not be limited to the following:

• Budgeting
• Taxes
• Your liquidity, or ready access to cash
• Managing your risk
• Investing your money
• Retirement and late-life plans

 

When You May Need a Financial Planner

Having a financial plan is crucial, especially for women, who generally have shied away from becoming financially literate and being proactive in managing their money. Even here on J2G, we have given tips on preparing a financial plan, which is an important first step in getting you more informed about your money and the goals you may want to achieve. However, you may not be knowledgeable enough to know whether the strategies you intend to employ or the plan you have in place will allow you to achieve your goals. This is where a financial planner’s expert advice and perspective come in.

You may wish to hire a financial planner should any of the following apply:

• You don’t know much about managing money;
• You want help developing a long-term financial plan;
• You want to gain a comprehensive understanding of how your finances are likely to evolve over the course of your life;
• You need help managing debt;
• You need help planning for big investments, such as buying property or saving for college;
• You are going through a major life change, such as combining finances with your partner, getting married, getting divorced or having a baby;
• You are nearing retirement and want to make sure you have enough saved;
• You are self-employed or an entrepreneur and so your financial situation may be less stable than someone who gets a regular pay cheque.

 

In summary, ensuring that you are well-positioned financially requires a fair amount of time and attention, especially since there is a learning curve that must be overcome. Also, improving your financial health takes time, and the older you get, the less time you have. Furthermore, as you get older, you may become less comfortable with exposure or risk, and so cannot afford to make too many costly mistakes on the journey to build financial wealth. A financial planner can help you chart a faster and more robust path to achieve your financial goals, whilst ensuring that you minimise the risks, losses and setbacks that are almost inevitable on the road to greater financial freedom.

 

 

Image:  Anna Shvets (Pexels)