Thursday, September 19, 2013

Six Things a Great Financial Planner Should Do For You

A good financial planner is an important part of your hopes for a financially stable future. How do you judge if the service you receive from your planner is of a high enough standard? One way would be to examine how he prepares to study your case before he makes any actual recommendations. Every competent financial planner needs to go through the following steps when offering financial advice.

You should first see your planner define what exactly you can expect out of the deal

Many people aren’t clear about the exact level of service to expect when they hire a financial planner. They may believe that they are entitled to complete handholding, for instance, when some planners only offer broad guidance. People are often not clear on how exactly they will be charged for services, either.

A good financial planner will always start off with sending you a clearly-worded letter of engagement, with the following pieces of information. 

  • You get an exact list of the services provided and some clarification on what is not provided. You should also see a list of fees and charges. 
  • If you are signing on to a financial planner as a couple, the letter will make it clear what is owed to both and what will happen if you get divorced. If the planner sees himself as serving one spouse and not the other, this letter should make it clear. 
  • The letter will make it clear what level of cooperation is expected from you. You’ll see information about what data you need to provide on your current financial position and the documents you need to provide on an ongoing basis (such as your tax returns). 

Your planner needs to find out what your goals are

The specific financial moves that your financial planner thinks of depend on the specific goals you have – both short-term and long-term. If building a retirement nest egg is all you need to plan for, your advisor will come up with a plan for investments that have an element of risk attached, but that promise high returns. If you need to plan for your child’s time in college five years down the line, a less risky strategy may be called for. Your planner should also offer advice on his own for what kind of possibilities you should plan for that aren’t on your radar, already.

Assess your current financial position

A close look by your planner at your income, savings, debts, investments and spending habits is an important part of putting you on the road to your goals. Whatever weaknesses the planner notices in your current position – perhaps you don’t have an emergency fund or your investments are noticeably out of line with your goals – he will need to correct them before going ahead with making recommendations for the future.

Prepare a financial plan for your goals

When the groundwork is laid, it’s time for your financial planner to actually make recommendations. He should advice you on how much you should be saving, what steps you should take to protect your income and savings from unpredictable market occurrences and draw up a plan with specific investment ideas.

Put the plan into action

Once your planner has a fully formed plan in hand that you approve of, he will either begin making investments on your behalf himself or guide you on how to go about making them. While it’s easier to let a financial planner make all the investments needed on your behalf, it can be expensive to use a planner’s services this way.

Finally, your planner needs to monitor progress


Financial planning is not an exact science. The investment world is a constantly changing one. Once your planner’s recommendations are implemented, it’s important to constantly monitor them for results. Constant monitoring and readjusting is important also because your own goals can change over time. A change in your job, a new addition to the family and other changes can require constant replanning.

William Dawson has used the services of a financial planner for many years now. An avid blogger, he enjoys posting on a variety of websites.


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