Have you ever considered working with a financial advisor? Having someone guiding your financial decisions for the future is a great way to provide peace of mind as well as financial security. But who exactly is this financial professional and what should you consider before working with one?
A financial advisor or financial planner is someone who can help put your personal finances in perspective and help you plan for the future. This advice might cover retirement savings, investments and preparing for major life changes, such as buying a home or paying for college. A financial planner can help a dental hygienist just starting her career, even if she doesn't have a lot of money to invest or monetary obligations.
When working with a financial advisor, you actually want to work with someone who is a certified financial planner (CFP). Why a CFP? Because it means that they've gone through rigorous training and have passed an exam from the CFP Board. The CFP Board is a nonprofit organization that sets professional standards and ethics — and administers the CFP exam — so consumers like you can feel confident putting your finances in this person's hands. The CFP suggests you ask a potential financial planner several questions before hiring, such as "What are your qualifications?" and "What type of clients do you usually work with?"
It may seem intimidating to some dental hygienists at first, but working with a financial planner can help you get a handle on your finances and make smart choices when it comes to planning for retirement. A good CFP will help you design a retirement plan that makes sense for your lifestyle and future plans.
In addition to putting money toward traditional retirement savings accounts, your financial advisor may talk to you about long-term care options. That may seem really far off, but here's why you want to talk about it now: it's less expensive to buy long-term care insurance when you're younger. That's because insurers give discounts to healthy, young people. According to the American Association for Long-Term Care Insurance, when you buy long-term care insurance at age 40, you could receive as much as a 62 percent discount. Wait until you're 50 to buy that same insurance, and that discount shrinks to 46 percent and then even lower the older you get.
There are two ways that financial planners get paid. One is through commissions they make on your investments. The other is a fee-based service. That is, you're paying for their time and expertise only when you need it. You should find out upfront how a CFP's fees work, and make sure you feel comfortable with how they're going to get paid. Financial guru Suze Orman tells Forbes that you should never hire a financial advisor who is selling a product. You want the advice you're getting to be independent of the money they might make on your decisions. To avoid this conflict of interest, look for a fee-only CFP associated with the National Association of Personal Financial Advisors.
When it comes to working with a financial advisor, a good one will want to educate you about your money and empower you to make the best financial decisions for your present and future.
- Find a reputable certified financial planner.
- Set and act upon your financial goals when you are young and healthy.
- Ask a financial planner about the compensation before working with them.
In most cases, it's best to establish and pursue your financial goals as early in your career as possible. It may be an intimidating task to tackle on your own, so working with a financial advisor may put you on the path to success. Before trusting an advisor, ask several questions about their qualifications and fees to make sure you're getting the best advice possible.
This article was brought to you by Colgate-Palmolive Company. The views and opinions expressed by the author do not reflect the position of the Colgate-Palmolive Company.