Wait…what’s the difference between a financial planner and a financial advisor?
It’s like the difference between squares and rectangles. All squares are rectangles, but not every rectangle is a square. All financial planners can be considered financial advisors, but not every financial advisor is a financial planner. What a financial planner does is help someone set down a plan to get to a long-term financial goal. It can be saving for retirement, saving for a future college fund, saving to buy a home, or something else. Hiring a financial planner is more of a long-term commitment. A financial advisor, in simple terms, is a money manager. That covers brokers, bankers, insurance agents, investment advisors, and more. They can help with shorter term things, like trading or banking.
Do I really need a financial planner?
That really depends on you and what you need. What are your priorities? Do you want to save for something short-term, like a tour of Europe next year? Or are you saving up to buy your first house? As a rule of thumb, the more specific your goal is, the better your chances are with financial planners. They specialize in financial strategy to get you to a certain point, or get you a certain thing. This is also a good time to do a little introspective thinking. Are you already a good planner yourself? Do you find it easy to make a budget? If the answer to one or both is no, you may want to consider hiring a planner. Even if you are naturally organized, it can be useful to get a third-party perspective on your finances.
Another plus of hiring a financial planner is improving your financial literacy. That’s super important for women, because unfortunately, finance is a male-dominated field. Knowledge is power, ladies. Empower yourself by learning. As you work with your planner, you’ll get better at the jargon, better at navigating what seems like a complicated and intimidating world. But, just like everything else, all it takes is some practice before you’re investing, banking, or accounting like a pro.
What should I think about when looking for a financial planner?
Okay, so you decided to go with a financial planner. Now what? Ask your friends and family if they have any recommendations. Consult the internet. Do whatever you need to do to make sure the planner you end up choosing is qualified, because just about anyone can claim to be a financial planner. Take a look at their credentials. Are they licensed? Some of the common license types include Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), and more. How long have they been a financial planner? Do their specializations match what you’re looking for? If you’re a woman who wants to save to have children, consider hiring another woman as your financial planner. Women are better communicators in general, and it will take less explaining on your part if you are trying to have a baby. Things like breastfeeding costs would be an automatic consideration, while a man would likely have to be reminded.
Make sure you ask your financial planner how they expect to be paid. Is it a single fee, multiple fees across a longer period of time? Is there a fee if you want to change your plan to fit a new goal? In a way, finding the right financial planner is a bit like finding the right therapist. There are so many on the market, so it could take a few consults to settle on one.
Happy hunting, ladies!