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I was thinking today about how much the Internet helps us make financial decisions.
We research products, connect with experts, read news, etc. Pretty much all my life I've leaned on the Internet to either learn more about something or to even open a new account.
I can't imagine what it was like before, when you actually had to deal with live humans to learn or transact.
I would think that the wealth of knowledge and options available online would make professional financial planners a dying breed, but the opposite seems to be true (if you believe job forecasts, that is).
I've always steered clear of planners, because the commissioned planners (in my opinion) are biased, and because the few non-commissioned planners I've found charge for a consultation, or I don't have enough money for them to want to bother with me.
I'm hesitant to pay for something I may already know. But I do wonder if I'm leaving something on the table by not using a good planner.
Anyone have any opinions?
Tom Valenti is a marketer and project manager who currently works for a financial institution in New Jersey. For more info, visit him at http://tomvalenti.com.
As a CFP, I can confidently say that a financial planner is not a necessity, but a good one can certainly be "worth it."
However, in your accumulation years, the need is lower. Some good financial education and access to broadly diversifed, low cost, low turnover (index funds) is enough for most people.
Most of our clients are in the $3-10 million net worth range, and are at or near retirement. The distribution phase can be trickier, and our clients are generally very happy to have our help.
My firm is fee-only, and I agree that commission based financial salespeople are biased.
For me, I won't do anything with money that I don't understand. Typically, that means a lot of reading and research. My attitude forces me to become competent to advise myself on financial matters.
That said, the #1 deficiency in my model is that I only know about what I happen to find out about through my research. If I miss something….well…too bad for me. In that case, I think a financial planner would be superb.
I totally agree with Eric's comment. I'm in the accumulation phase, and find that the "advice" one typically needs just isn't that complex. Spend less than you earn. Save. Don't be stupid. Track and monitor your money. Find low cost index funds and invest in them. Most people would be well served with a good personal finance book and a copy of Microsoft Excel so they can understand their own finances.
The primary criticism of this should be "what if I don't want to figure it out". Well, then I say, good luck. Stories abound of people getting cheated by auto repair, heating/ac repair, and "financial repair".
Agreed, a good financial planner is certainly worth the money. As long as that planner has an objective position and you pay them directly for the service. If they're directly associated with the products that they're selling and not providing you with numerous quotes it may not be as valuable