How to Find the Best Financial Planner
Financial planning can be simple, but it can also be very nuanced. So who is the best person to help you create your perfect financial plan? The answer is simple.
That person is you. 😀 Here’s why.
Unlike a meal plan or other short term aspirations, a financial plan isn’t an event that you can predict and design a specific result for. Financial planning is more of an ongoing process, with assumptions and approximations. Money is a part of life, and as long as we’re alive, we’ll need to make plans for it. 🙂 Financial professionals can give us guidance, but who will look after our money when they move, or retire? The best financial planner for you is you because you are always with you.
Give a man a financial plan and he’ll probably be okay until his plan needs to be adjusted. But teach a man to make financial decisions for himself and he will be free to explore the endless possibilities on his own.
A Few Analogies to Financial Planning
Who’s the best person to write up a business plan? The entrepreneur of said business, of course.
Who’s the best person to create a road trip plan? The person who’s organizing the road trip!
Who’s the best person to design a personalized career plan for Alex, who’s about to graduate high school? The answer is Alex.
In each of these cases the “plan” is based on future probabilities and assumptions with an approximate outcome in mind. As time progresses, events in reality will replace those assumptions chronologically. Adjustments will have to be made to each plan, but the overall goals are maintained. The company may alter its business plans due to unforeseen market forces. Road closures may force the road trip to take a detour. Alex may change his mind about his major in college.
Plans don’t have to be made alone. Individuals can consult business planners, school counselors, or other professionals. But it’s ultimately the responsibility and the decision of the individual to create the best plan for him or herself.
That’s why the best person to create, update, and adjust your financial plan, is you. Nobody knows you better than yourself. 😉
Similar to business plans or travel plans, financial plans aren’t meant to be precise and all encompassing. There are too many variables to consider for the future. So the best we can do is set our plan in motion, and then make adjustments to it when new facts and evidence become available. As time goes on, we have to pay attention to how reality compares with our past assumptions and use what we learn to adjust our future plans accordingly. Unlike with certified financial planners, there is no potential for conflict of interest when you make a financial plan for yourself.
Fee based advisors are helpful too, as they typically have your best interest in mind. However, cost can be an issue for investors with larger sums of money. In many cases, fee based advisor charge about 1% of the portfolio’s value annually. Since I have about $1 million of assets under management, I would be paying someone $10,000 every year just to invest my money for me. That’s a bit steep for me. Which is why I prefer the DYI approach to financial planning. The only type of financial advisor I would speak with is one that charges purely on an hourly basis.
In a spousal situation where one person is the primary financial planner for the household, it’s still important for the other person to understand the general financial plan. Both individuals should also know the reasoning behind their financial plan, and have shared goals. All financial plan adjustments should be made aware to the other partner. This way, if circumstances change both spouses will still be on the same page. 🙂
Random Useless Fact:
Updated Jan 30th. Lots of people mistakenly thought this security guard’s hand was fake to conceal a gun.
First, thank you very much for saying I’m the BEST financial planner! It’s truly an honor!
Second, check your random fact…I had to google it sorry. It just seemed too odd. It’s the guys real hand, he moves it and adjusts his coat with it. I wouldn’t be surprised if he had a small automatic weapon under that coat tho and that’s why he’s holding his hands like that.
That’s funny. Maybe his intention was to use reverse psychology and fool everyone, and then become famous on the internet lol. Anyway, thanks for catching that. I’ve updated the fact now. 🙂
My co-worker has just hired a financial advisor. She wouldn’t pay me $25 to pick up the form, fill it out for her and she would get $2500/year in company match.
Yet she hired a guy who didn’t know our company matching policy, somehow manage to get her to move all of her asset from savings into stock account. She then screwed herself by going from full-time employee to PRN, lost all of her benefits, no insurance, no retirement, no nothing… geeezz she paying that guy $250, then $200/quarter to look after the money. heheh
The readers that read your blog are probably good financial planner, but for the medical professionals like ourselves, that might not be the case, we’re scientist, we’re not business people. With that said, even Mr.W is not invest in anything, and he has a accounting degree (business background). He runs a $30M budget for the cancer division at our hospital, but haven’t gotten a clue about his personal finance?!!!??!!
Maybe your co-worker should’ve consulted you instead of hiring an advisor lol. $2500/year for a company matching plan is a great deal because it’s a guaranteed return.
Definitely agree that we, the account holders, are the best managers of our accounts!
After all, it’s our money and it would be unfortunate to not know how to handle what we own.
Yup. We have to take responsible for our own finances because nobody cares more about our money than ourselves.
I was wondering if you could comment on your 5 year performance. For the first 2 1/2 years your TD portfolio (as I understand it, a mix of equities & bonds) basically stays in line with the TSX Index. Then all of a sudden your portfolio significantly breaks away from the index over the next 2 1/2 years.
There’s a couple of main reasons for this. First, the U.S. dollar appreciated greatly against the Canadian dollar over the past 2 1/2 years. It went from about $1.00 in early 2014, and climbed to roughly $1.30 today. Second, the U.S. financial market has outperformed Canada. The S&P500 market index in the U.S. has increased more than the TSX Composite in Canada. Since I hold a lot of U.S. stocks using U.S. currency in my RRSP, my portfolio would appear to have made larger than expected gains when everything is converted back to Canadian dollars for my net worth calculation.