Signs of a Good Financial Planner

While many people associate a financial planner with investment advise, there is so much more to consider when choosing a quality advisor. This individual should be able to help you find the right kind of insurance, whether it be life insurance or disability income insurance, develop a savings program and address estate planning issues.

In today’s financial world, many insurance agents and investment specialists are referred to as financial planners. Fortunately, there are individuals in both professions that are competent enough to create a suitable financial plan for a couple expecting their first child, or the widower who runs a small business of his own, with $2,000,000 in his portfolio.

It is important to find a financial planner that can understand your concerns. He or she should have knowledge of investing, insurance and credit products and principles and know how to read an income tax return and W-2 document, as well as your bank and investment statements, and create a balance sheet that shows both your assets and liabilities. Additionally, this individual must show empathy and spend time listening to you, in order for you to trust him or her. If the advisor bores you or talks over your head, you probably should interview a few more financial planners, prior to deciding on one. Therefore, it is just as important for you to understand your financial planner, as vice versa.

No one wants to do business with a financial planner that is afraid to speak the truth. Sometimes your goals may not be realistic or your investments are not performing well enough for you to retire by next year. If you make $40,000 a year, you probably won’t retire with $50,000,000 in your 401K. You need a financial planner that will tell you when you are not sticking to the financial plan or if new pitfalls exist in your plan. Your financial planner should think of himself or herself as a “doctor” for your personal finances. Therefore, sometimes a financial planner needs to deliver bad news.

Nothing is more important than having a good financial plan. It should address all of your current assets and liabilities and project your future income in retirement. The plan must consider future obligations, such as the cost of college or buying a new home. So, the financial plan should be comprehensive enough that you even budget for your monthly gas and food expenses.

Your financial planner will give you a copy of the financial plan. Together, you should decide which parts of the plan to implement. The financial planner may suggest a certain type of life insurance (i.e. 30 year term life insurance) or to move money from an investment account to a saving account, in order to serve as an emergency fund.

Some financial planners will like to meet on a quarterly basis. Otherwise, many other planners call their clients every three months and give an update on the progress of the plan. At least once a year, there needs to be a major review of the financial plan. During this meeting, you should update the plan if necessary and talk about the accomplishments of your financial planning.