Blog - 5 reasons you shouldn't hire a financial planner in 2017
1) You are happy with the status quo and don’t have any money worries
A financial planner will dig into your financial life. They will want to know what drives the decisions you make and what keeps you up at night and if you have a partner they will want to know this from both of you. Without this conversation a true financial planner doesn’t feel they can do their job effectively so they will ask difficult questions and try to understand what it actually is that you want to achieve.
It might sound a little strange to those who haven’t experienced financial planning but how can they build your financial plan without understanding you as the client.
You should definitely not hire a financial planner if you have no money worries and you are happy with your finances, you won’t get any value from it.
2) You know where you stand financially, where you are going and know what money you need to get there
This is the interesting part. Financial planning is a process of collaboration between the client and the planner. A good financial planner will want to know what your finances look like today, usually in some form of budgeting spreadsheet like this one .
They will want to know what you want to achieve over certain time period (e.g. buy a house, live abroad) and then they will start the work behind the scenes to build you a financial roadmap of how to get there and approximately how much you need to make it happen. It isn’t an exact science but they will use a few assumptions in a forecasting model.
They will look at things like investments, property and other solutions as a commodity to help you get to your destination. A financial planner doesn’t really spend a lot of time trying to prove to their clients how great and sophisticated their solutions are, they just want a solution for a client to get from A to B and will often prefer simplicity.
If you have this covered or you just want to live day by day looking to make a big return on your savings and investment, then a financial planner definitely isn’t for you. Don’t hire one, they will just give you simple solutions.
3) You feel confident making decisions for you and your family and you don’t need to be challenged
A financial planner once they have built your roadmap will continually challenge any future financial decisions and keep you accountable to the plan. Like a good personal trainer or business coach, they will keep you on track and as your life changes and evolves they will adapt your financial plan. This is what they call the ongoing service part.
Some financial planners will meet every year, some will meet more regularly as an agreed service, but they will use these meetings to show where you are on your financial roadmap and they will take a big amount of burden from you around managing the family finances. They will usually be available for when you want a sense check on big decisions or just general money queries.
If you are confident in making these decisions and you don’t need an ongoing service like this, why the hell would you pay for one. What a waste of money.
4) You understand the world of finance and you have the time to look after your money
Proper financial planners will break down the complex world of finance and put it to you in a simplistic and relevant way. They will speak in your language and explain what can be a complex beast in a way that you understand as they been working with you and your family as a team.
They will tirelessly search the investment world for solutions that help you meet your objective and they understand that they can find better deals and solutions than your average consumer. They often have the burden of the regulator scrutinising what they are doing and making sure that they are giving good advice and delivering good outcomes to clients. Looking after other people’s money is a busy job and behind the scenes, there is a lot to running a good financial planning company.
To be honest, you may be able to ask some random guy on a money forum a question about finances or read an article on a website that gives you some of the answers. If you have time to trawl through the free information world in the hope that you stumble on the golden nugget that helps you achieve your financial goals you don’t need a financial planner. All the answers are on the internet (somewhere surely).
5) I already have a financial adviser or investment manager who advises me on products and investments and I am happy with the returns
A financial planner leads with the planning and not the solutions. They don’t try to build trust by showing clever ways to save tax or make a high return. A decent financial planner would take the tax thing into consideration in all advice given and they would target returns needed to achieve your financial objectives.
They understand that the world of investment and products is becoming more commoditised and competitive therefore if you are solely relying on this as a business model, they understand that this business model will struggle going forwards. Financial planners are looking to have long term partnerships with good clients who understand they need help with managing their finances, want a financial plan and listen to advice. Good financial planners don’t want to sell clever products or solutions to their clients as they believe this undermines the partnership.
You know exactly what costs you are paying (good luck with that one) your existing financial adviser or investment manager, what service is to be delivered and you feel value from the relationship. If you are happy to solely talk about investment returns and clever solutions and ways to save tax, then hiring a financial planner is definitely not for you.
If you are still reading and you are interested in meeting a financial planner
I am excited to say that there is an emerging group of financial planners out there and at Xentum we have 3 (soon to be 4) younger planners doing really good work for clients and families. I also co founded Nextgen planners because I believe that some people want help with their finances and I wanted them to seek the help of a proper financial planner as my feeling is that you get more bang for your buck.
I know a number of financial planners doing awesome work for their clients, running successful and profitable firms and if you ever want to learn about what a financial planner does in more detail, then I would be happy to help, just reach out here.