4 REASONS WHY A FINANCIAL PLANNER CAN BE A YOUNG PERSON’S BEST FRIEND
A friend of Alia’s, in her mid-50s, is doing well, saving for retirement, feeling hopeful about her future.
Invariably, however, she will look at me during our conversation and say, “If only I had started sooner.” We both know what she means. If only she had started saving and investing earlier, making financial planning a priority in her 20s and 30s, well before she thought she had enough money to do so.
I’d love to rewind those years and assure her younger self: You don’t have to have “enough” money to work with a financial planner. Today’s never too early, so let’s get started!
In fact, financial planning works best when you start early, even before you think you’ve built enough in wealth.
Say, for example, you’re in your early to mid-20s, at a first “real” job with a 401k offering. Or you receive an inheritance that suddenly creates unexpected assets. Or your savings that took years to diligently accrue now goes well beyond the three to six months of emergency savings, and you don’t know what to do with it, how to best invest it.
The wisest thing young people or anyone who thinks they don’t have enough in wealth is to start by realizing this very fact: Everyone deserves to feel secure, hopeful and optimistic about their financial future.
And this month is Financial Literacy Month. It’s the perfect liftoff for young people and others to begin working with a financial planner—even if they think they don’t have enough money.
Here’s a few reasons why.
Creating a game plan with a financial planner:
1. Calms fears. Financial challenges and stress feel less overwhelming after gaining a clear assessment of your situation and what it will take to get you on the right path. It’s also reassuring to know that a trusted professional is in your corner, guiding the way and showing you that solvency is not only possible but it is progress, starting with the first meeting.
2. Builds healthy saving and investing habits. Creating the right financial habits when you’re young builds the foundation for a healthy, safe, secure and dream-filled life when you’re older. Even if you can only contribute small amounts, it’s important to get started.
3. Eliminates debt. The average student loan debt sits at about $37,000. What’s more, 20 years after entering school, half of the student borrowers still owe $20,000 each on outstanding loan balances. For 20-somethings coming out of college and landing their first job, a financial planner knows the strategies to best manage their debt and pay it off while also creating a budget and prioritizing payments.
4. Encourages saving for the stuff of life. It’s more rewarding to buy a first home with a healthy down payment or plan your dream wedding with savings that earned a healthy interest. A good financial planner asks questions to define and account for life’s big moments, so that your long-term financial goals stay on track. After setting goals and strategy, your financial planner will monitor your investments and suggest adjustments based on evolving life events and circumstances.
My advice for young people looking for a financial planner?
Find a financial planner you trust. The money you have holds worth—and so do you. Both deserve to be treated accordingly. Whether you come to the table with $1,000, $10,000 or $100,000, you must feel confident in your advisor.
Why? You’ll likely have a few discussions along the way related to the money you’ve made, the assets you’ve accumulated, and the decisions you made about spending or saving them. These chats might make you feel uncomfortable or embarrassed. That’s OK. Be honest and your returns will be greater—and you’ll probably feel a lot less stress.
Do some homework too.
Ask around. Talk to friends, family members and work colleagues for recommendations.
Make sure your financial planner is held to the fiduciary standard, which is a legal and ethical commitment that requires advisors to always act in their clients’ best interests.
Find out their fee structure. Strive to work with fiduciary, fee-only financial advisors.
Check out their qualifications, registrations and licenses. Ideally, they should have a CFP® (certified financial planner) after their name. For reference, you can see I do, here.
Once you’ve identified two or three promising candidates, meet with them (virtually or in-person) to gauge their experience levels, credentials, service offerings and demeanors.
Remember that your financial planning journey is unique, only unto you. It’s exciting to think of the possibilities! The best part? You don’t have to prepare for it alone when a financial planner helps prepare the way with what you have.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
