Financial Planners: What Do They Know?

Here's the situation: You've just arrived at middle age. You're making a comfortable living and your mortgage is at least a third of the way to being paid. You're not entirely sure about your retirement plans, but you know you have enough capital to make your golden years golden.

So do you need the help of a financial advisor?

The short answer begins with "no, if…" And the long answer begins with "probably." Here's the short answer: No, you don't need the help of a financial advisor, if you're a professional financial advisor yourself.

Everyone else in the situation described above could very probably use the help of a qualified financial advisor. There's a tremendous number of retirement options available, and everyone's financial situation is unique to them. Because of this tremendous variety, it's important to enlist the help of a professional so you can make the right decisions.

Think about it: Will you really do it yourself? Most people who don't hire a financial advisor plan on -- eventually -- compiling their portfolio or retirement plan themselves. But things happen. Life gets in the way. We get lazy. And financial planning isn't a simple skill to learn. In cases like this, the do-it-yourself route isn't always the best solution, and you're not getting any richer by procrastinating.

But how do you know who to choose? That's a great question. Hiring financial planners isn't as simple as looking through the phone book or picking the first name in a Google search. There are a few simple ground rules: Ideally you should choose someone who's geographically close to you so you can meet with him or her. You should also lean toward an independent investment advisor with a manageable client list, instead of a huge firm where you may be lost in the crowd. Ideally you should be working with the same adviser for much of your lifetime.

You should also ask how many clients your advisor has. If he or she is seeing too many people at once, your portfolio may not be getting the attention it deserves. Finally, find out whether the advisors on your short list are commission-based or fee-based financial advisors, or a combination of the two.

What plan is right for me? This is the question a good financial advisor can help you answer. Should it include mutual funds? CDs? A money market account? How much should I put aside every month? What kinds of sacrifices should I make now to have a better life later?

As you can see, a single question leads to several more. And once you get deep into a financial plan, even more questions arise. Is it time to fund your IRA? When's the deadline for filing those life insurance forms? Should you wait until your kid is born to start a 529 plan, or can you do it while you and your spouse are still trying? And what the heck is a 529 plan, anyway?

The point is: Financial planning is complicated. And it only gets more complex as you dive into it. Because of this, it's important that you're able to rely on the advice of a trained financial planner. Otherwise, you won't have the time to generate the income that'll keep you comfortable in your retirement years.

Smith Asset Management regularly provides winning financial advice to a variety of professionals who are too busy making money to worry about investing it. Let us do the heavy lifting for you. Contact us today to set up an initial consultation.