Should I use a financial planner or is it a waste of money?

[Shaabenanizer]

I think I may have let myself get bullied into an appointment with a financial planner. Overall I’m content but sometimes worry that I’m too conservative with my money.

I’m 35 yrs old single female with secure job that pays $80+K a year. Brought my first home last year. No debt other than the mortgage, though car is 14 years old so there maybe car payments in the not-so-distance future. $20,000 in savings and $200,000 in various retirement accounts and moderate investment. I regularly send 10% of my monthly salary to my mentally handicap sister to maintain her quality of life during this recession. I’m my sister’s legal guardian; our parents are diagnosed sociopaths that I’ve kept out of our lives so I sometimes feel unguided about money management, which I have mostly done by instinct up until now. I’ve read couple books recently about investments but honestly too scared to go beyond the conservative route in part because there is only me to depend on.

A financial planner costs about $1,000. I have no experience with them and wondered if it is worth forking over hard earned money.

[jpg7n16]

Seeing as how I'm trying to become one, I'm kinda biased There is much more involved with financial planning than just investments. A proper planner will evaluate what your needs are in: insurance, investments, employee benefits, retirement goals, income tax planning, and estate planning (wills, trusts, gifting, etc.)

I would check out the following info from the CFP Board's website. (CFP = Certified Financial Planner)

Certified Financial Planner Board of Standards Inc. - How to Choose a Planner

Certified Financial Planner Board of Standards Inc. - Your Rights as a Financial Planning Client

Certified Financial Planner Board of Standards Inc. - Personal Data Organizer

[jIM_Ohio]

I think I may have let myself get bullied into an appointment with a financial planner. Overall I’m content but sometimes worry that I’m too conservative with my money.

I’m 35 yrs old single female with secure job that pays $80+K a year. Brought my first home last year. No debt other than the mortgage, though car is 14 years old so there maybe car payments in the not-so-distance future. $20,000 in savings and $200,000 in various retirement accounts and moderate investment. I regularly send 10% of my monthly salary to my mentally handicap sister to maintain her quality of life during this recession. I’m my sister’s legal guardian; our parents are diagnosed sociopaths that I’ve kept out of our lives so I sometimes feel unguided about money management, which I have mostly done by instinct up until now. I’ve read couple books recently about investments but honestly too scared to go beyond the conservative route in part because there is only me to depend on.

A financial planner costs about $1,000. I have no experience with them and wondered if it is worth forking over hard earned money.

If you need a professional's opinion to clear up self doubts, then it is money well spent. Only you can put a price on your time... how many hours would you be willing to spend researching the answers yourself, and is that time worth $1000 to you...

you can do it yourself
you can get a second opinion (for a fee).

Avoid any commissioned products... and you should be OK.

Here are a few points...

a) do you spend less than you earn?
b) do you save 20% of gross of each paycheck? I would not include the money sent to support sister in this (yet).
c) what are your goals in life


If the planner does not check those 3 issues up front, run away as fast as you can.

If you tell the planner you think you are too conservative, he will tell you how to get more aggressive.
If you tell the planner you think you are too aggressive, he will find a way to tell you how to take risk down a notch or two.

My point is that in the research I've read, most planners try to feel you out for what you think needs to be done, then give you an answer in that general direction.

There is no one right answer in any situation...

for example I could tell a planner I have 95% equities and 5% bonds... (and I consider myself moderate-conservative) and then get different advice from different people. Most of what a planner can add on in value is based on time- how much time do you want to invest in reading and researching plans and alternatives?

You could post your portfolio online to this forum and 1-2 others and advice will be all over the place- no one is wrong, everyone just has different ideas of what conservative is (95% equities is probably aggressive by most definitions), and how to lower risk (there is more than one type of risk- you might have low market risk but high inflation risk...) and part of what a planner should do is educate you as to what risks exist and how you are handling them.

[MonkeyMama]

The answer to your question is, it depends.

One of the first things a financial planner should also ask you is if you have a will or life insurance (considering situation with sister).

A financial planner can be a decent investment if you really do not understand anything financially or really just hate numbers/can't do it alone. Even then, it is hard to find someone good and trustworthy.

From what little you have shared about yourself, I really think you can figure it out on your own. There are a lot of resources and forums online. I'd at least try. Give it a solid year to read up on personal finances and ask questions. I think you will gain confidence in doing it yourself. If you rather poke a sharp stick in your eye, hire a planner. IT may be harder to find a planner with your best interests in mind than just doing it yourself, is all.

[jpg7n16]

I thought about your situation some more and came up with something for you to consider. A good planner should help you find a solution to the following questions (if you don't know them already):

• Who will be your sister's guardian if something happens to you?
• How will she be looked after financially?
• Is there a trust you could set up to look after her if you are incapacitated?
• Who will take care of you if something happens to you?
• If something happens to you, who gets all the money you've saved up?
• If you get disabled, do you have enough to make it?
• If you get disabled, will you have enough to look after your sister?
• If you are incapacitated, will your parents have guardianship over you?
• Is your home insurance coverage enough?
• If your home fell in value, do you carry too much insurance?
• What are your personal financial goals?
• Would your sister qualify as a dependent to save on income taxes?
• Are you investing towards your goals in the most tax-efficient manner?
• Are you leaving yourself open to too much inflation risk?
• Are you saving enough to meet the standard of life you'd like to have in retirement?

If you read that list and don't know the answers to alot of the questions, seeing a planner may be well worth it. As always I'd recommend a CFP.

[snafu]

Can you put off or delay the appointment until later after you've had time to do some research? I suggest the book from that yellow series 'Investments for Dummies,' as it is an easy read as is 'Wealthy Barber.'

[Like2Plan]

I think I may have let myself get bullied into an appointment with a financial planner. Overall I’m content but sometimes worry that I’m too conservative with my money.

I’m 35 yrs old single female with secure job that pays $80+K a year. Brought my first home last year. No debt other than the mortgage, though car is 14 years old so there maybe car payments in the not-so-distance future. $20,000 in savings and $200,000 in various retirement accounts and moderate investment. I regularly send 10% of my monthly salary to my mentally handicap sister to maintain her quality of life during this recession. I’m my sister’s legal guardian; our parents are diagnosed sociopaths that I’ve kept out of our lives so I sometimes feel unguided about money management, which I have mostly done by instinct up until now. I’ve read couple books recently about investments but honestly too scared to go beyond the conservative route in part because there is only me to depend on.

A financial planner costs about $1,000. I have no experience with them and wondered if it is worth forking over hard earned money.

Shaabenanizer,
I think your first stop should be to an estate planning attorney. If your sister receives any kind of aid, you may need to think about a special needs trust so that you can continue to provide"supplemental and extra care" over and above that which the government provides.

link to speical needs trust info

link to wikipedia for background info

A financial planner can be very helpful, but I wonder what kind of gains could you expect from the $1,000 investment? (Is this an annual fee?) If you are really conservative right now, the planner should take this into consideration when giving investment advice.

[jIM_Ohio]

I thought about your situation some more and came up with something for you to consider. A good planner should help you find a solution to the following questions (if you don't know them already):

• Who will be your sister's guardian if something happens to you?
• How will she be looked after financially?
• Is there a trust you could set up to look after her if you are incapacitated?
• Who will take care of you if something happens to you?
• If something happens to you, who gets all the money you've saved up?
• If you get disabled, do you have enough to make it?
• If you get disabled, will you have enough to look after your sister?
• If you are incapacitated, will your parents have guardianship over you?
• Is your home insurance coverage enough?
• If your home fell in value, do you carry too much insurance?
• What are your personal financial goals?
• Would your sister qualify as a dependent to save on income taxes?
• Are you investing towards your goals in the most tax-efficient manner?
• Are you leaving yourself open to too much inflation risk?
• Are you saving enough to meet the standard of life you'd like to have in retirement?

If you read that list and don't know the answers to alot of the questions, seeing a planner may be well worth it. As always I'd recommend a CFP.

A CFP is a good idea, but also remember because a person has a CFP does not make them objective... insurance agents, brokers and other occupations can all take the CFP exam. Beware of anyone which works on commissions, even if they have a CFP.

[grand_canyon]

Just be careful. I made the mistake of using a "financial planner" in my 20s. Luckily, I was young and didn't have tons to "invest" (buy their prop products). If they start trying to get you into variable universal life insurance, annuities, and other proprietary products, this could be a sign that they're trying to make maximum dollar off you. The best thing to do is ask them do they have any conflicts of interests. If they start squirming or avoiding the question, this could be a sign of problems.

[jpg7n16]

... The best thing to do is ask them do they have any conflicts of interests. If they start squirming or avoiding the question, this could be a sign of problems.

Seeing as how financial planners are required by law to cover conflicts of interest on form ADV part 2, and must be addressed if asked... yes that planner would have a problem if they avoided the question.

Seems like people have had bad run-ins with "planner"s in the past. Not everyone who calls themself a planner is in it to help people. That's why you should interview a couple (norm is 3) before selecting a planner. And credentials help - aka CFP.

And yes, there are people who got a CFP designation that get paid on commission (but may still give good advice), or who don't always give the best advice. But since there is at least a regulatory body that covers them, so you stand a better chance at finding someone who will look after your interests. Hence why I'm in the process of obtaining mine.

There are also doctors and dentists who prescribe treatments because they get paid more on them. Does that mean you should never go to any doctor or dentist ever again? No. It just means to be careful when you do.

[rob62521]

I think I concur with many posters. I fortunately lucked into a guy when I was in my 20s who wasn't trying to sell me lots of products, but build my investments. I'm fairly conservative and so my portfolio reflects that. We've used him to purchase CDs with higher rates than we can get around here and we aren't paying him a commission, the banks do. When a local insurance company was coming to my school to encourage people to open 403bs with them, I asked him what he thought because when I started, I had to put in a minimum of $50 a pay period. This company said you could put in as little as $5 a pay period. His advice was to beware of the hidden costs because it almost sounds too good to be true.

I would meet with this person, but if it like an insurance company and the only thing this person is selling is this companies' products, I'd say thanks and excuse myself.Also, I would take the advice and see if their credentials are in order.

[EEinNJ]

There's a lot of good advice here already, and it seems like you're already in a good financial situation.

The only thing I would add is, a one time fee to get things set up for you could save you a lot of research and work on your own. Certainly that could be a big help in non-investment areas like insurance. After that, though, it would be best for you to understand and keep an eye on the investments you have made. You may find that after you're on a secure footing you'll be more comfortable with taking more risk.

[Slug]

There is a lot of good thinking here already. I'm in a similar position age-wise and want to make sure I'm on the right track. This year I shelled out for an accountant to double-check my TurboTax taxes and advise me for tax planning going forward. There was no earth-shattering information, but just to hear an expert say I was doing really well and then offering some tidbits on top of it was great in terms of my peace of mind. For someone as savvy as many here, I think that's a large part of what we're buying when we pay for such a service.

Like has been said, really due your due diligence on the planner and be very planful about your meetings so you insure your exact needs are being met.

Next peace of mind for me: landscaper then financial planner

[Shaabenanizer]

Thank you so much, especially the useful bulleted pointers. I feel I will be much better prepared with the appointment, definately less intimidated. I'll keep my ears tuned for any buy-my-company's-products bells and "commissions". I actually have the book "Investment for Dummies", read it once and put it away for three years. Time to bring it back. And if the planner guy turns out to be the real deal, then buying a peace of mind would be worth it.

Baby steps. Like Slug I paid for an accountant this year to check my taxes after I bought my first home. Next baby step is put my wishes on paper i.e. in case on incapacitation.

Thanks all!