WEA Credit Union


Financial Resource Center

Money Management


What's a Financial Planner?

by Alexandra Armstrong / August 26th, 2021


Some people confuse the term financial planner with financial adviser. The primary function of a financial adviser is to manage your investments. A financial planner takes a more comprehensive point of view, looking at your total financial picture. They help you define your financial goals, prioritize them, and then work out a written plan to achieve them. After they prepare a financial plan, they may also manage your investments.

Why would you seek the advice of a financial planner?

Most people look for a financial planner to help them prepare for a particular life stage, the most common being retirement. You might want to retire at a certain age but don't know whether you can afford to do so and still maintain your lifestyle. Other motivating life events include an inheritance, a job change, the birth of a child, a marriage, the death of a spouse, or a divorce. A financial planner's initial job is to sit down with you and help you define your short- and long-term financial goals. Once you've determined where you want to be financially and when, the planner creates a plan to help you achieve those goals. The initial financial plan is the starting point. To be effective, the plan should be reviewed regularly to make sure it's adjusted for changes in the economy, tax laws, and your own circumstances.

What's involved in the financial-planning process?

First, the planner will ask you to fill out a financial questionnaire. This would include listing your assets and liabilities, your income and expenses, your insurance coverage, and your tax and legal documents. The more accurate the information you provide, the better your plan will be.

Once the planner has this information, he or she will meet with you and spend some time reviewing the financial data together. If you're married or have a partner, both of you will need to join the meeting so you can both define and prioritize your goals. This sometimes reveals differences that you’ll both need to discuss. You’ll also be asked to complete an investment risk-tolerance questionnaire.

After this initial meeting, the planner combines your personal and financial information and prepares a written financial plan that gives you a picture of where you are now. The document will show whether your financial goals are obtainable in the desired time frame given your current situation. A typical plan will include a current balance sheet listing what you own and what you owe. It would also provide you with a taxable income and cash flow statement.

The plan would include an assessment of your current investments and would make specific recommendations for actions you can take to achieve your financial goals. The plan may also include recommendations for estate and tax planning, as well as reviews of your insurance coverage.

Once the plan is prepared, you’ll meet with the planner again to go over it and make any necessary adjustments. Next, the planner helps you implement the plan recommendations. Some recommendations involve the help of another professional such as an estate-planning attorney or accountant. Typically, the planner would help you with changes to your investments. Finally, the planner updates your plan periodically to make sure that the plan is still working for you to make sure you are on target to reach your financial goals.

Everyone can benefit from the guidance of a professional financial planner – from the young adult just starting their career to the older person preparing for retirement. They will help you find the best path to achieve the financial goals you set for yourself.

 

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