You may want to manage your money on your own, but there are times when it’s a mistake to go it alone.
Ian Kutner, an advisor with San Diego Wealth Management, was among the country’s very firstcertified financial planners. It’s been more than 40 years since he was certified, and he says he still finds that people overlook the value of a planner and misunderstand what they do.
“Sometimes people think a planner might be employed by a particular insurance company and direct [clients] into investments sold by that company,” he says.
On the contrary, a good financial planner isn’t going to sell you a specific product in order to make a commission. Instead, a quality advisor will listen to your goals, look at your current finances and recommend how best to move forward with your money.
While you don’t always need to work with a planner on an ongoing basis, there are times when it makes sense to stop in for a consultation and a financial check-up.
1. When you get your first job.
“You may not engage with a financial planner for years after that,” says Keith Klein, a certified financial planner and owner of Turning Pointe Wealth Management in Phoenix. “But go in for an initial consultation to learn about how all [your financial options] work.”
2. When you get married or divorced.
Another good time to get input from a financial planner is whenever you enter or leave a marriage. Bringing in an unbiased third party can help minimize financial losses in a divorce and may make it easier for engaged couples to have conversations about combining assets and income in marriage.
“One of the biggest reasons people should work with a financial planner is so that they don’t make emotional mistakes,” says Richard Wald, managing director of Merrill Lynch Global Wealth Management. For example, a spouse might feel attached to a family home and insist on keeping it as part of a divorce settlement. In exchange, he or she may lose out on retirement savings that could prove to be much more valuable in the long run.
3. When you receive a large sum of cash.
Receiving a large sum of money, such as from an inheritance, bonus, buyout or big raise, should be a boon to your financial health. Unfortunately, many people to squander the opportunity it presents.
A 2012 study from Ohio State University’s Center for Human Resource Research found most people save only half the inheritance money they receive. In the study, 826 people received an inheritance, with the median amount being $11,340. Of those, one-third saw their overall wealth remain the same or even decline after receiving an inheritance, apparently as a result of poor financial decisions.
Regardless of the amount of your windfall, meeting with a financial advisor can ensure you put the money to good use. “People think they need $1 million to work with a planner,” says Cecilia Beach Brown, a certified financial planner at Lincoln Financial Securities in Annapolis, Maryland. “Nothing could be further from the truth.”
4. When you need to take care of aging parents.
Kutner says people should think outside the box when considering how a financial planner can be useful. “Aging parents want to stay in their homes, and how do you pay for that?” he says. “It’s amazing how much a financial planner can [help].”
According to Genworth Financial, the average annual cost of a home health aide is $45,760. If you think your parents or another elderly loved one will need care, either in-home or in a nursing home, talking to a financial planner sooner rather than later can help you prepare for this sizeable expense.
Culled from: USNews.com
Written by:Maryalene LaPonsie is freelance writer who has been reporting on personal finance, retirement, higher education and insurance for more than seven years.