Many people don't think twice about visiting a doctor when they are sick, calling the plumber when the sink is clogged or seeing a mechanic when the car is on the blink, yet they are reluctant to seek financial help. According to the California Society of CPAs (www.calcpa.org), there is a common misconception that only the truly wealthy need professional financial planning. In reality, most people can benefit from financial advice.
Not everyone is ready for a visit to a professional financial planner. If, for example, you have high credit card debt and little discretionary income, you might be better off seeking free or low-cost help from a nonprofit credit counseling service.
With the help of a financial planner, on the other hand, you can identify your goals, assess your current situation, and learn how to meet your objectives. Financial planners typically counsel clients about taxes, investing, budgeting, risk management, and retirement and estate planning. In carrying out their services, they may confer with other professionals such as attorneys, stockbrokers, insurance agents and bankers.
Here are six signs that might signal the need for professional financial advice:
- Ads Target You
Things may be going so well for you that suddenly the ads for high net worth individuals are targeting you.
Greater wealth often dictates the need for more sophisticated financial planning in terms of investing, taxes and estate planning. Financial advisers can help you identify and achieve your short- and long-term financial goals.
- Banks Don't Respect You
Things may have gone so badly for you lately that even the teller at your local bank doesn't take you seriously.
Let's face it--for a number of years, it was difficult not to make money in the market. The recent downturn has taken many new and experienced investors by surprise and drained their financial resources. A financial planner can help get you back on track.
- You've Started a Family
There's nothing like a few kids running around the house--and the thought of paying for their college educations--to get you to call in the experts. Professional financial advice can help you incorporate realistic college savings strategies into your financial plan.
- You're Getting Older
Even if you are 50 and haven't begun saving for retirement, it's not too late to start.
No matter your age or income level, there are steps you can take to ensure a more secure financial future. A professional financial planner, especially one who specializes in retirement, can help you maximize the use of tax-deferred contributions to a retirement plan, take advantage of the recently-enacted "catch-up" provisions, and determine the proper asset allocation and appropriate level of risk for your situation.
- You Have Tax Probelms
You may be convinced that you're paying too much in taxes. Don't feel alone. In today's fast-paced world, it is difficult to keep up with new tax laws, much less to understand how they apply. A CPA can help you develop effective tax strategies that may save you significant dollars.
- You Want to Leave an Estate
You may be financially secure but want to leave money for your heirs. Professional estate planning can help to ensure the proper transfer and distribution of assets to minimize estate taxes and administrative costs.
Other circumstances that could call for professional financial advice include receiving a substantial inheritance or windfall, starting a new job, and getting married or divorced.
Understand the Fee Arrangements
Before contracting for professional financial advice, it is important that you understand the fee structure. In most cases, financial planners are compensated in one of two ways. Some charge the client a fee for their services. Others earn a commission on the financial products they sell to clients. Some planners use "hybrid" payment arrangements (part commission, part fee). Be sure that you understand how you will be paying for the advice you receive and that you are comfortable with the method.
Keep in mind, too, that all financial planners are not created equal. The PFS (personal financial specialist) accreditation, established by the American Institute of Certified Public Accountants (AICPA), is awarded to AICPA members who have demonstrated considerable experience and expertise in the area of financial planning. A CPA/PFS can provide objective financial advice that meets your individual financial goals and objectives.
With the help of a financial planner, you may be able to achieve some new financial goals, protect the wealth you do have, and ensure the future financial security of you and your family.