I find myself having the same conversation with almost every prospective client, and I’ve realized that it’s a topic I’ve never written about before, even though it’s an extremely important one.
Many people in my industry believe that everyone needs an ongoing relationship with a financial planner. However, I disagree. Consider the health and fitness industry and the different needs that consumers have and the models that serve them.
1. Some require a personal trainer who provides them with workouts, a meal plan, and stays with them in the gym.
2. Others need a workout plan and can go to the gym alone.
3. Some prefer group classes to stay motivated
4. Others can find the information they need online and exercise independently.
The point is that everyone is different and has unique needs. Who are we to tell people that they must conform to a single model that works for everyone?
How To Know What You Need?
Who Is The Right Fit For Just A Financial Plan?
Let’s start with those who need only a financial plan. During my meetings with clients, I ask numerous questions to understand them better, including their financial history, decision-making process, and more. Typically, those who only require a financial plan are organized, have managed to avoid bad debt, have not sold their investments during market downturns, and have implemented all the easier stuff. This shows me that they can handle what needs to be done independently. However, if they are unwilling or unable to implement the financial plan on their own, it’s not worth it. Those who can stick to the plan, hold themselves accountable, and ensure that everything gets done often can be served well with just a financial plan. Then they can come back for a check-in in future years when their circumstances change to ensure that they are on the right track.
While this model is not suitable for everyone, it can be perfect fit for motivated and sophisticated people.
Who Is Right For An Ongoing Relationship With A Financial Planner?
More people fit into this bucket than the other from my experience. A vast majority of people lack the education, motivation, and time to do their financial planning alone. They also have biases and different perspectives than their spouse, making it challenging to align their financial goals and make real progress. This is why financial planners exist and why ongoing relationships are so crucial.
When many prospects come to me, they have no plan and no organization, even though they have high incomes. These are the ideal people for an ongoing relationship with a financial planner. They know that if they get a plan, they won’t implement it on their own, and they choose to hire a planner to help them overcome this.
A financial planner will create a plan for them and then guide them through its implementation. They will provide them with checklists of action items to complete between every meeting, giving them more guidance and support, which is what most people need.
Most of my clients are busy business owners or highly compensated employees with families and lots of obligations outside of work. They want someone to free up their time, tell them what to do, and help them do it. There’s nothing wrong with paying to ensure that what needs to get done actually gets done.
When trying to determine what relationship is right for you, be honest with yourself. Have you done most things right so far? Are you organized? Can you follow a plan and hold yourself accountable? How complex is your financial life? Will things change significantly over the next few years? Use these questions to help figure out what relationship will benefit you the most.