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Like most people, you have hopes and dreams and life goals for yourself and your family. These might include buying a home or business...saving for college education for your children...taking a dream vacation...reducing taxes...retiring comfortably. Financial planning is the process of wisely managing your finances so that you can achieve your dreams and goals - while at the same time helping you negotiate the financial barriers that inevitably arise in every stage of life.
Managing your personal finances is ultimately your responsibility. However, you don't have to do it alone. A financial planner can help you make decisions that make the most of your financial resources.
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Financial planning can help you:
- Set realistic financial and personal goals
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Assess your current financial health by examining your assets, liabilities, income, insurance, taxes, investments and estate plan
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Develop a realistic, comprehensive plan to meet your financial goals by addressing financial weaknesses and building on financial strengths
Put your plan into action and monitor its progress
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Stay on track to meet changing goals…changing personal circumstances…changing stages of your life…changing products, markets and tax laws
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Do you need the services of a financial planner?
How do you know if you could benefit from the services of a qualified financial planner? You may not have the expertise, the time or the desire to actively plan and manage certain financial aspects of your life. You may want help getting started. You may benefit from an objective, third-party perspective on what are often emotional, difficult decisions. And in today’s hectic world, it can be beneficial just to have a financial expert looking over your shoulder to double-check your planning efforts and make sure you stay focused and follow through with your financial plans.
Events that might prompt you to seek the services of a planner
Often a specific event or need will trigger the desire for professional financial planning guidance. These might include:
- Saving enough for retirement, or protecting your lifestyle
- Handling the inheritance of a large sum of money or other unexpected financial windfall
- Preparing for a marriage or divorce
- Planning for the birth or adoption of a child
- Facing a financial crisis such as a serious illness, layoff or natural disaster
- Caring for aging parents or a disabled child
- Coping financially with the death of a spouse or close family member
- Funding education
- Buying, selling or passing on a family business
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Aren’t all financial planners the same?
No! Be wary of people who call themselves financial planners but who appear more interested in pushing specific financial products at the expense of your real needs and goals. A genuine financial planner can help you address a variety of financial needs, not just investments, just insurance or just taxes |
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How do financial planners charge?
Financial planners can be paid in a variety of ways for their work, which are listed below. Some are paid by more than one method. MFA has no formal position on the merits of any form of compensation. Instead, it is our belief that the planner’s competence and ethical standards should be the primary consideration in your selection process. However, before entering into a relationship with a planner, you should have a clear understanding of how he or she will be compensated. A particular compensation arrangement may best suit your needs |
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There are several commonly accepted methods of compensation:
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Fee-only. The planner is compensated entirely from fees for purposes of consultation, plan development or investment management. These fees may be charged on an hourly or project basis depending on your needs, or on a percentage of assets under management.
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Commission-only. There is no charge for the planner’s advice or preparation of a financial plan. Compensation is received solely from the sale of financial products you agree to purchase in order to implement financial planning recommendations.
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Combination Fee/Commission. A fee is charged for consultation, advice and financial plan preparation on an hourly, project or percentage basis. In addition, the planner may receive commissions from the sale of recommended products used to implement your plan.
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Fee-offset. Commissions from the sale of financial products are offset against fees charged for the planning process.
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Salary. Some planners work on a salary and bonus basis for financial services firms.
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In all of the above categories of compensation, you should request information on any real or potential conflicts of interest. In addition to commissions received from any financial product sales, you should ask whether there are outside incentives or bonuses to be gained by the planner for certain recommendations. |
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