When Will I Need A Financial Planner? - Yellowtail (2024)

When Will I Need A Financial Planner?

In a previous article I explained the differences between financial planners and financial advisers. In the UK there’s no legal definition between the terms so practitioners tend to self-identify as one or the other (or even something else – wealth manager, financial architect) depending on the way they approach their work with clients. I prefer the term financial planner as the planning is at the heart of the work I do.

Before I start looking at individual financial products or solutions, I take a step back and ask questions to identify what the client is trying to achieve. Instead of talking about investment strategies or pension products, I consider how hard a person’s money needs to work over their lifetime to reach their objectives. We can then agree whether it’s achievable and whether we need to adjust some of the assumptions we make about money. Only when we understand that can we begin to discuss the financial portfolio that supports it.

Having established there are important distinctions between planners and advisers what are the signs that indicate your need for a financial planner? And what are the benefits they offer? How do you choose the right one for you? And how much will it cost?

Understanding the Role of a Financial Planner

Financial planners work with individuals to help them manage their wealth and optimise their financial outcomes. They bring expertise across a range of related fields including investments, taxation, retirement planning, and estate management. By taking an overarching and comprehensive view of your financial situation, planners craft long-term strategies that align with your individual goals and circ*mstances.

They will analyse your current financial position, anticipate future needs, and tailor personalised solutions to optimise your resources. Creating robust strategies to navigate current challenges whilst also laying the foundation for a sustainable financial future and the realisation of your broader life aspirations.

“A financial planner’s role extends beyond immediate concerns, integrating tax efficiency, retirement security, and legacy planning, crafting a seamless roadmap for sustained financial well-being”.

Signs It Might Be Time for a Financial Planner

You’re Struggling to Meet Your Financial Goals

If you find yourself falling short of your financial targets or facing challenges in achieving long-term objectives, a financial planner can provide strategic insights. They analyse your current financial situation and devise a comprehensive plan to align your resources with your goals, ensuring a more structured and effective approach.

You’re Navigating Major Life Events

Life events such as marriage, divorce, inheritance, or the sale of a business can significantly impact your financial landscape. A financial planner can guide you through these events, helping you make informed decisions that align with your new circ*mstances and safeguard your financial well-being.

You’re Worried About the Transition into Retirement

One of the biggest events we will face is the transition from working for a living into retirement and living off the assets we’ve accumulated during our lifetime. The days of generous ‘final salary’ pension schemes are long behind us, and the State Pension is barely a safety net, and the commencement date is continuously being pushed further away.

Accumulating assets is only one part of the equation, and one which a planner can help with. But the decumulation of assets is arguably the bigger challenge and a planner can add so much value throughout the period that people are drawing down on their assets.

You’re Uncertain About Investment Decisions

Investing wisely is crucial for wealth preservation and growth. If you’re uncertain about where and how to invest, a financial planner can offer tailored investment strategies based on your risk tolerance, time horizon, and financial objectives. Their expertise helps optimise your portfolio for your specific needs.

You Lack Time and Expertise for Financial Planning

In the fast-paced world of business and personal commitments, finding time for comprehensive financial planning can be challenging. A financial planner serves as your dedicated financial advocate, handling the intricate details of your financial life and allowing you to focus on your core responsibilities.

Benefits of Hiring a Financial Planner

Expertise and Guidance

Financial planners bring a wealth of knowledge and experience to the table. Their expertise in investment strategies, tax planning, and risk management ensures that your financial decisions are well-informed and aligned with your overarching objectives. This professional guidance is invaluable for navigating the complexities of the financial landscape and can remove some of the biases that affect our personal decision-making around money.

Personalised Financial Planning

Every individual’s financial situation is unique. Financial planners tailor their strategies to your specific needs, considering factors such as income, expenses, risk, and future aspirations. This personalised approach ensures that the financial plan is a precise fit for your circ*mstances, optimising the likelihood of success.

Investment and Tax Efficiency

Optimising investment and tax efficiency is a cornerstone of financial planning. Financial planners employ strategies to minimise tax liabilities while delivering sustainable investment returns. This dual focus enhances the overall efficiency of your financial plan, contributing to long-term wealth accumulation.

Peace of Mind and Confidence

Having a well-thought-out financial plan instils a sense of security and confidence. Financial planners provide reassurance that your financial future has been carefully considered and is in capable hands. This peace of mind allows you to navigate life’s uncertainties with confidence, knowing that your financial affairs are strategically managed.

How to Choose the Right Financial Planner

Credentials and Qualifications to Look For

When selecting a financial planner, it’s essential to scrutinise their credentials and qualifications. Look for certifications such as Chartered or Certified Financial Planner indicating a commitment to high professional standards. It’s also important to inquire about their experience in handling situations similar to yours.

Evaluating Compatibility and Trustworthiness

Establishing a strong rapport with your financial planner is crucial for a successful partnership. Assess their communication style, approachability, and willingness to understand your unique circ*mstances. Trust is the foundation of this relationship, so ensure you feel comfortable discussing your financial matters openly. A good financial planner will spend time with you before you engage them to establish whether they are the right fit.

The Cost of Hiring a Financial Planner

Understanding Fee Structures and Their Implications

Financial planners may charge fees in various ways, such as hourly rates, fixed fees, or a percentage of assets under management (AUM). Understand the fee structure and its implications on your overall financial plan. While cost is a consideration, it’s essential to weigh it against the value and expertise the financial planner brings to the table.

Making the Decision to Hire a Financial Planner

I’m often asked, where do I start? What’s the first thing I should do to begin the financial planning process? And I always say, find the one thing that is easy to achieve to get the ball rolling. People often have a reluctance to start, thinking the process will be burdensome and complex, but it isn’t, your planner will be doing the ‘heavy lifting’.

One way to overcome the reluctance to start is by collating your paperwork. Then think about what help you need. The decision to engage with a financial planner is a significant step toward achieving financial success and peace of mind. Assess your current situation, recognise where you need help and professional guidance, and carefully evaluate potential financial planners. The benefits of a well-crafted financial plan extend beyond monetary gains, providing a roadmap for a secure and prosperous future.