What Is the Role of a Financial Planner?

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A financial planner is an expert who focuses on helping people gain control over their financial situation. Depending on the needs and requests of the client, this can mean anything from setting up a budget to investing extra income or planning retirement options. Financial planners are no accountants, and they are usually not in charge of the money directly, instead focusing on providing advice and letting the client make the final decisions.


A financial planner will, first and foremost, help clients get control of their current financial issues, especially debts and cash flow. Depending on the type of income and the expenses of the household, this can mean organizing and planning capital influx, learning to reinvest and risk management. If there are outstanding debts or major financial issues that are putting at risk the good credit history of the client, a financial planner can help devise a payment plan and help the client understand how to better distribute his income so he can make the most of it.


When it comes to planning for the future, a financial planner can help by counseling clients on insurance (especially life insurance) planning, estate planning, writing a will, tax liabilities, education planning (including saving for college) and retirement investments, especially IRAs and 401(k)s.


Some financial planners specialize in helping people get out of debt or working to achieve a specific goal. This may include issues as complex as strategic asset allocation or as simple as learning how to budget money to make the most of it. This type of situation may require a more involved approach, with the financial planner setting up a plan of action and then helping the client work through it step-by-step until the main goal is achieved.


Hiring a financial planner makes sense if you need help in more than one aspect of your finances. If you are only looking for investment advice, however, you would do better with a broker. The same is true if you just need insurance advice or tips on how to make the most of your 401(k) contributions. A financial planner also is a good choice if you need ongoing advice, in which case it makes sense to establish a relationship with someone who understands your financial history and can provide advice along the way, no matter how much your finances change.


There are two ways of working with a financial planner. The most common one is to hire one as an ongoing adviser, in which the financial planner takes over at least part of the paperwork and helps with ongoing decisions regarding investments and day-to-day financial decisions. The other is to have a one-time meeting to help plan or organize your present financial situation. In this case, it often makes sense to go back at least once every couple of months to review progress and make sure you are staying on track.