Should You Get a Financial Planner? What Do Financial Planners Do?


Posted on Friday 10 January 2020


Should You Get a Financial Planner? What Do Financial Planners Do?

It’s safe to say that most Canadians aren’t exactly thrilled about the thought of hiring a financial planner. In fact, in 2018, 65 percent of Canadians weren’t getting help from a financial planner at all. Why not? Most survey respondents said that they either didn’t know who to trust, felt too embarrassed to talk about their finances, or simply didn’t understand why they would need a financial planner in the first place.

And it makes sense that so many Canadians would be so hesitant to reach out to a financial planner—after all, It isn’t always easy to understand what they do or why you would need their help.

So what does a financial planner do? Simply put, they help you manage your financial health. And the good news is that you don’t have to be a millionaire to partner with a financial planner (but hey, it would be nice). A financial planner can help with a wide umbrella of topics, like:

  • Helping you set a budget
  • Preparing for retirement
  • Creating an investment portfolio
  • Saving for education expenses
  • Planning for tax season
  • Managing large sums of wealth
  • Making charitable donations
  • And more!

There are a number of different scenarios in which a financial planner can be helpful—and keep in mind that in this situation, we’re talking about a real person, not a robo-advisor (which is another topic for another time).

If you’re stuck in the decision-making process between hiring and not hiring, ask yourself the following questions to see if you need a financial planner:

Am I getting ready for retirement?

Planning for retirement is a big job with a lot of moving parts, which means it can also be a pretty complicated task. You’re trying to prepare for years (and maybe even decades) without a traditional paycheque, which means taking a hard look at how you are spending and saving your money. A financial planner can be a great asset in helping you with:

  • Choosing the best retirement account for your financial situation
  • Making the right amount of contributions to maximize your tax benefits
  • Ensuring you are setting aside enough to maintain your lifestyle in retirement
  • Creating the best schedule to start withdrawing funds from your retirement accounts

Each one of these can have a significant impact on what your finances will look like in retirement, which means you’ll need to have a solid understanding of how to approach each step. And retirement planning is filled with acronyms like RRSP, RIF and TFSA—so if these sound like Greek to you and you aren’t sure where to begin, it might be time to schedule a one-on-one consultation with a financial planner.

A financial planner can take a holistic look at your finances to make the best recommendations and strategies for your unique situation. That type of professional guidance is invaluable—and when it comes to retirement planning, there’s too much on the line to afford making a mistake.

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Am I planning on making some big life changes?

There are a few key life changes that can have a pretty significant impact on your long-term financial health, like: starting a family, getting married, buying a house, going through a divorce, or opening a business. If you can see one or more of these on your near-term horizon, you might want to reach out to a financial planner.

Take this for example: If you’re starting a family, a financial planner can help you set up savings accounts to start putting money away for college education once your kids graduate from high school. They can also help you with things like choosing the right life insurance or estate planning to ensure that everyone in your family will be financially secure for decades to come.

Even better, they can work with you to create a budget and a customized plan to manage all of the child-related expenses that will pop up (get ready for it, because you could easily be spending well over $240,000 by the time your first child turns 18).

The fact of the matter is that big life changes often require equally big changes in the way that you are saving and spending your money, which is where the expert advice of a financial planner can come in handy. They’ll ensure that you are putting enough money away—and in the right places—to help you achieve your goals.

Am I self-employed?

Being self-employed is a great reason to start working with a financial planner. You can even look for professionals who specialize in working with entrepreneurs and self-employed business owners, increasing the likelihood that your business can thrive over time.

There are a lot of nuances to consider when it comes to your finances when you are self-employed, such as:

  • Am I putting enough away for taxes each year?
  • How can I structure my business to get the best tax benefits?
  • Am I managing my business finances properly?
  • How can I ensure that my business stays profitable over the long-term?

Entrepreneurs also have unique financial opportunities to take advantage of—but as with anything in life, you have to know where to look. Partnering with a financial planner can help you figure out the best business structure to use, get ready for tax season, manage your employees’ pay, and more.

After all, part of the benefit of being self-employed means that you get to have greater flexibility and control over your 9 to 5; why shouldn’t you should get that with your finances, too?

Do I have a high net worth?

Chances are that if you’re bringing in enough income to classify yourself as high net worth, you don’t even need to ask yourself this question—you already know! But as a guideline, most financial planners would consider high net worth individuals as anyone with around $1 million in liquid (investable) assets.

If you have a high net worth and you haven’t enlisted the help of a financial planner yet, now is definitely the time to start. Managing large balances across multiple kinds of accounts can quickly become overwhelming, and you’ll want to have someone at the helm to manage your finances in a smart, coordinated, and organized way.

A financial planner can help high net worth individuals navigate through all of the tricky complications that come along with large sums of money, such as estate planning, setting up trusts, making charitable donations, diversifying an investment portfolio, and employing advanced tax strategies.

Do I want to start investing or diversifying my existing portfolio?

Whether you are new to the investment game or if you want to amp up your existing portfolio, bringing in a financial planner can make a huge difference in how your money grows over time. They can help you with:

  • Buying and selling stocks
  • Diversifying and protecting your portfolio
  • Understanding your levels of risk and reward

Your investments should be aligned with your short-term and long-term financial goals, so a financial planner will also get an in-depth understanding of what you want to accomplish five, ten, and twenty years from now.

You can choose to have hands-on instruction on how to manage your portfolio—or if you would prefer to set it and forget it, your financial planner can take the reins and ensure that your investments are performing with minimal (or zero) effort on your part. Either way, you get the benefit of professional guidance from someone who is deeply familiar with the stock market and up to date on any changes or trends (because none of us has the time to become an investment pro overnight).

How to Know if You Don’t Need a Financial Planner Yet

Of course, there are some instances where you might think you need a financial planner, but it isn’t necessarily a good idea to commit right away. You might want to hold off on hiring a professional advisor if you:

  • Have a super tight budget.
    Financial planners aren’t exactly cheap—and while you might be able to work with someone who understands your budget, a tight budget probably means your money would be better spent building up your savings instead.

  • Can’t meet the initial investment requirements.
    Most financial planners will have a minimum requirement to begin using their services. That amount will change from one planner to the next, and it might even depend on the type of services you are using: for example, it’s probably going to cost more to have a professional design and manage your portfolio than to help you create a budget.

    But if you can’t comfortably meet their minimum requirement without putting yourself into financial stress, that’s a sign to hold off on financial planning for now. For the sake of your financial health, it’s best to give it some time and wait until you are in a better spot.

  • Have a ton of debt.
    While a financial planner can definitely help you create a plan to start paying down your debt, you might want to find a different sort of professional financial help if you have a significant amount of loan or credit card debt. Look for a debt or a credit counselor and work on chipping down your debt before you partner with a financial advisor.

If working with a financial planner feels right for your financial situation, it’s a smart idea to go full steam ahead. Don’t be afraid to take advantage of the key benefits that a financial planner can offer, like detailed, professional money management; an impartial look at your financial health; and access to tips and tricks that you might never learn on your own. With a professional financial planner by your side, you will be well on your way to succeeding in all of your financial endeavors!