How did you fare after the events of 2020 financially? If you’re like most people, the struggle was real. Many people found themselves without an income at a days’ notice and wondering how to manage their finances further. There’s a lot of overhyped and oversimplified advice out there that can seem overwhelming. Should you invest your all stimulus check in crypto or just keep it under your mattress for “safe” keeping? Or, if you need someone who can help streamline all your options then perhaps consider getting a Financial Planner.
What They Do
A financial planner can offer you expert money advice that’s suited to your unique situation. They will help you to achieve your current needs and plan for long-term goals. They can help you limit your expenses, reduce your debt, and invest in your future. Some planners are specialized and work in specific fields like taxes or investment management. Other general practitioners are Certified Financial Planners (CFP) and provide advice on a broader spectrum of things like budgeting to insurance policies. If your financial situation is more complex then you are most likely to benefit from using a CFP. Having a professional perspective on what your monetary priorities should be will help in making the necessary choices to achieve your goals. They are especially helpful in life-changing situations like getting married, divorces, or the loss of a loved one. Depending on your budget and your specific case details, there are several types of financial planners you can use.
Robo-advisors are great for beginners. You can work with automated firms enabled by companies like Fidelity and Vanguard. Using this method will significantly lower the cost of managing a portfolio. These advisors charge a small fee of 0.25% of your current account balance. A computer algorithm will develop your investment’s potential details.
For those who prefer a more personal experience, consider getting an in-person financial planner, especially if you have complicated needs. They can provide more thorough and comprehensive insight and help you develop the best financial model. The CFP certification means that the financial planner has undergone diligent training and testing procedure. Of course, professionals usually come with a high hourly rate so this type of expert advice will cost you. Charges range from hourly rates from $200 to $400 or per project at a set amount much higher. However, the first meeting to review your case what help they can provide is typically free.
A Happy Medium
There is also a happy medium between those options by getting a real-life financial planner together with a computer-driven case manager. You will have to meet with your financial planner online via video or phone as opposed to in person. They also charge less than the traditional CFP’s but more than the Robo-advisors.
When you start working with a financial advisor, they will need to review your case by asking you things like your goals and financial priorities. You’ll need to think both in short term and long-term aspects of your situation. How much money are you spending versus making? How much debt do you have versus how many assets do you own? You can expect regular contact from your CFP, but its manner will depend on what type you use.