Janice asks a good question. Managing our financial affairs is getting more
complicated. Even if you don't have a lot of money. The truth is that everyone
needs someone to manage their financial affairs. But, it's equally true that
many people can be that manager for some or all of their affairs. Let's see if
we can't create some guidelines to help decide when you need to call in a
The first thing is to understand what a financial planner does. It is not the
same as a stock broker or investment adviser. A planner will help you define
your goal and then work with you to assemble a plan to achieve that goal.
For instance, your goal might be retirement. The planner would want to know
at what age you'd like to retire and what you'd like to do during retirement.
From there he'd determine how much money it would take to afford that lifestyle
and then create a strategy to accumulate enough money.
In some cases the planner will need to call in other experts. Many planners
started out in specific fields (accounting, law, investments, insurance) and
will handle transactions in their field. But outside of their expertise they'll
need to call in other professionals.
A financial plan can be for a specific goal like college education for your
kids. Or it can be for all of the financial goals throughout your life.
Now that we have an idea of what a planner does let's see if we can determine
whether Janice can do it. Like many do-it-yourself projects, you'll need to
answer a couple of questions before deciding whether to tackle the job.
The first question: will you know when a plan is required? Needing to plan
and not doing one could cause serious problems later. Some appropriate times
might be marriage, birth of children, opening and closing a business, and
retirement. You'll also want to do some preplanning for retirement and for your
Next question: can you define your goal accurately? Putting Junior through
college isn't specific enough. You'll need to consider public vs. private
schools. Will Junior work? Live on or off campus? Knowing the right questions to
ask is important to defining your goal.
Once you have a goal it's time to create a strategy for attaining that goal.
Our college example would require calculating how much money would be required.
You'll need to estimate how much prices will change in the intervening years.
The plan will use savings and investment tools. It also could include tax
strategies and possibly even legal documents.
Since most of us have fairly common goals there are many resources to help
Janice. She'll find books and websites dedicated to helping the
do-it-yourselfer. Most of the information is understandable, but it often
Now that Janice understands the goal and has some feel for the plan and what
resources are available, she can consider whether she's capable of doing the job
The first thing that might disqualify her from a do-it-yourself plan is
competence. Some legal documents, investment vehicles or tax strategies really
require training to understand and complete successfully. Other things can be
done by the average person.
The second question for Janice to consider is does she have the time and
temperament to do the job. It takes time to complete a financial plan. There are
a lot of 50 year olds who have been meaning to put a retirement plan together
for over 20 years and still haven't gotten it done.
Janice might also find that she has the wrong temperament for the job. You'll
need to enjoy doing research and math to complete many portions of a financial
Ultimately, no one is qualified to do every step of the different financial
plans you'll need in your life. Even professional planners refer clients to
specialists when it's appropriate.
In fact, that might be one reason to use a planner. They will have a network of
professionals. The planner will know their strengths and weaknesses. And should
be able to make a good recommendation when a specialist is needed.
For most people financial planning is a combination of do-it-yourself and call
the professional. Some planners are unwilling to work on anything short of a
complete financial plan that encompasses everything. But, most are comfortable
helping clients complete the portions that they can't do themselves.
Janice may also find that something that she thought she could do turns out to
be beyond her capabilities. That's alright. As long as she realizes that soon
and goes to get the proper help while there's still time to meet her goals.
Ultimately only Janice can decide how much help she needs in managing her
finances. But, having some idea of what the task is should make it easier for
her to come to a good decision.
Gary Foreman is a former financial planner who has published The Dollar
Stretcher.com website and newsletters
since 1996. If you'd like more time or money in your life visit
The Dollar Stretcher.com today!