The role of a financial advisor is to give you ADVICE about your personal finances. If you personally ORGANIZE your information and get your finances under control, that knowledge will employer you in your finances and you can simply go to a financial advisor to provide suggestions about key pieces of your plan.

Hire a Financial Advisor to Advise You, Not to Organize You

The role of a financial advisor is to give you ADVICE about your personal finances. If you personally ORGANIZE your information and get your finances under control, that knowledge will employer you in your finances and you can simply go to a financial advisor to provide suggestions about key pieces of your plan.

Have you ever wondered whether you should meet with a financial advisor?

The more you get your financial life in order, the more you realize how much you don’t know. There are so many unique circumstances that a google search just doesn’t always cut it, especially when you are faced with two good options, but aren’t sure how to personally apply them (such as deciding between contributing to a Roth versus a Traditional retirement account).

It was numerous situations like this in my own personal life that led me to start reading personal finance blogs and books. When I stumbled upon the book Your Money or Your Life and the financial independence movement, I became devoted to learning everything that I possibly could.

I also discovered personal finance continuing education courses for CPAs and subsequently decided to start pursuing the PFS (Personal Financial Specialist) credential, which is a designation similar to a CFP, but only for those that are also licensed CPAs.

I’ve since completed over 150 hours of continuing education related to personal finance, passed the PFS examination, and learned a lot about what it takes to create comprehensive financial plans.

But you know what? You don’t need that much formal education to make a basic financial plan for yourself. You don’t need to know everything, or even almost everything.

It’s mostly through small, simple things like sticking to a budget and automating my saving that I’ve been able to achieve many of my own financial goals and I have confidence that I’m well on my way to achieving many others. The positive changes I’ve seen in my life by getting my finances in order inspired me to start this blog. I want to share tools that others can use to improve their finances, and thereby change their lives for the better.

I truly believe that most people can create a basic financial plan for themselves.

Now that’s not to say that you don’t need a financial advisor or to discredit them in any way. It’s simply to emphasize the fact that you are the one controlling your finances on a daily basis and you are the one that has the power to make the decisions that decide your financial future.

Therefore, you should have a firm understanding of your financial situation by knowing the ins and outs of your finances. This includes learning about the unique factors that you face so that you can implement an ongoing financial plan that is adaptable when things change.

The free Making Your Money Matter class series will get you started with a step-by-step process to create your financial plan and will provide a foundation for you to understand the basics of the varying facets of financial planning. It won’t be everything you need to know, but it’s a start (often just knowing where to start is the hardest part!).

What Are You Really Looking For in a Financial Advisor?

One thing that stood out to me throughout learning about creating comprehensive financial plans is this:

A significant amount of money that you are paying a financial advisor is simply their time to organize your information, compile it and understand your income, spending and saving habits.

The real value of having a financial advisor is for the actual advice, not necessarily the compilation of information.

Perhaps what you’re really looking for is help with analyzing your cash flow, a plan to get out of debt, investment or retirement advice, tax planning or an estate plan.  Maybe you have your own rough plan already and want to get a professional’s opinion.

The right financial advisor can help you with all of these objectives. Their past experience, training, and personalized suggestions can be invaluable to you in growing your wealth and that long-term value can easily exceed the fees you pay them.

However, those fees can be steep, especially for those that aren’t wealthy but need the advice the most. Younger people are less likely than to people nearing retirement to seek out professional financial advice but are at the age where compound interest can greatly increase the value of their investments. Many people simply can’t afford to pay thousands of dollars for a complete financial plan.

What Documents Do You Need to Provide?

In addition to the fees, you will still also have to personally invest a lot of time into the process.If you obtain a full, comprehensive financial plan, you will need to gather and provide:

  • Personal information about yourself and family members
  • Risk determination survey
  • Budgets for the past year
  • Sources of income and future income estimates
  • Bank statements
  • Brokerage statements
  • Inventory of assets owned
  • Inventory of liabilities
  • Debt agreements
  • Insurance policies
  • Leases
  • Employee benefits
  • Tax returns
  • Social security benefits
  • Wills
  • Trusts
  • Divorce agreements
  • Business documents

If you go into the process without clear expectations, thinking that since you are hiring someone else to compile a financial plan for you that you won’t have to do any work you’ll be disappointed. It will be a significant time commitment whether you hire a financial advisor to complete an entire plan, or instead complete all or a portion yourself. But either way, you’ll have to face the daunting task of gathering all this information.

What Are the Steps in Creating a Plan?

In creating this plan, a financial advisor follows the following 6 steps:

  1. Determine objectives for the plan (i.e. goals)
  2. Gather client data
  3. Process and analyze client information
  4. Evaluating alternatives and recommendations
  5. Creating and implementing a financial action plan
  6. Monitoring, revising and reevaluating the plan

After completing this process, your financial advisor will have a very in-depth understanding of your financial situation. They’ll know your spending and saving habits, whether your risks are covered through proper insurance and more. The problem is, they aren’t always involved in your day-to-day financial decisions.

In addition, you can see how going to an advisor with clearly defined goals and organized financial information (such as a full statement of cash flows from the prior year and a recent net worth statement) can significantly cut down the time that the advisor spends, therefore costing you less to get financial advice. Time is money when it comes to hiring professional advice after all!

Should I Hire a Financial Advisor Then or Not?

If you’ve already set clear financial goals and organized your information with a good understanding of your financial situation, you can instead hire a financial advisor for personalized advice on the one or two areas that you need some additional guidance on, such as retirement planning or tax minimization.

My personal opinion is that someone that is fairly financially-minded and motivated doesn’t need a professionally prepared comprehensive financial plan. Instead, they should complete as much of their plan as they can themselves and then seek out personalized advice on any areas that they don’t fully understand.

To summarize, you should take the following steps:

  • Step 1: Ascertain your short, intermediate and long-term financial goals and quantify them as much as possible.
  • Step 2: Determine your current financial situation including cash flow, assets, liabilities, insurance policies, and any current estate plans. Essentially, these are covered in the class series.
  • Step 3: Research and read about the financial topics that you need more information about (such as creating a plan to get out of debt). Come up with your own plan as to what you think the best course of action would be for each financial planning component. Set a timeline to complete each of these tasks.
  • Step 4: Seek out the advice of a financial planner that specializes in any areas of concern or special circumstances where your understanding is lacking.

Final Thoughts

By being an active participant in creating your financial plan, you’ll save money in fees, have more confidence in your finances, and have the knowledge to continually update your plan as you go throughout various stages in your life. Knowledge is power and so is money. This experience will increase both!

What are your thoughts?


8 Responses

  1. As a blogger, I always find it a tough tightrope between advocating DIY financial advice and professional advice. I think you struck a good balance. There’s definitely value to both.

    1. I may lean toward DIY because I enjoy personal finances so much (probably too much). I’ve definitely been rewarded by doing things myself, but once I get everything organized, I do plan to get it all reviewed by a fee-only planner.

  2. Good advice. I’m a big believer in fee-only advisors. My friend mocked me for spending $2,000 on one consult, but I have the peace of mind that I’m not paying way more than that in additional back-end commissions and fees.

    1. Seriously-they’re likely getting that $2,000 one way or another, and I’d rather not have it taken out of my investments, which will (hopefully) be compounding enough that it would cost me a heck of a lot more than $2k!

  3. I’ve spoken on the phone with my 401k and brokerage advisers in the past. They know the balances in my account and how much I’m contributing, my long-term plans an goals. At the end they said I’m doing basically everything I’m supposed to be doing and didn’t have much to offer. I think I should call them and instead ask specific questions like for example ways to save on taxes and how to lay the groundwork for providing money to my kids when I pass. I can google it, but it’s nice to hear the voice of a professional sometimes.

    1. You must be doing a great job then! I really think that most people’s biggest problem is that they’re not taking action to save rather than that they’re not doing it “correctly”. A plan is useless unless you’re willing to take action. I think asking specific questions is a great idea.

    1. I recently read an article that was about accredited personal financial planners that have their own financial planners. It is beneficial to get an outside view of things sometimes, even if it is important to also have control over your finances yourself!



I’m Kathryn Hanna-wife, mother of 3 and a Certified Public Accountant. I love to budget (really, I do!) , build spreadsheets and spend money on travel, sewing supplies and good chocolate.


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