When Is It Time to Hire a Financial Planner?

A lot of us feel like we have a good handle on our financial lives. We balance the checkbook every month. We sock money away in our retirement plans. We even have a little left over to have some fun with. Things are going well, right?

It could be but the idea of “managing your money” can be endlessly complex. In many cases, people think of personal finance as making sure the bills are paid on time and picking a few mutual funds for the 401(k). While that is certainly a big piece of it, the truth is that it is much more multifaceted. To do a complete assessment, you need to also consider retirement planning, saving for college, estate planning and tax planning. And often times, it can be just like an onion – the more layers you peel back, the stinkier it gets.

If you find that one of the following situations pertains to you, sitting down to talk with a financial planner might make some sense.

You Need the Help

Some of us just feel plain old better knowing that there is a professional who is overseeing our finances and that alone is worth the cost.

Let’s face it. Most of us don’t have finance degrees and even for those that do some of these considerations can still get pretty hairy. The internet has become a wonderful resource for getting all of your money questions answered but sometimes you need somebody who can examine and help you with your situation specifically.

There’s an old saying that you don’t know what you don’t know. A financial planner can help guide you through situations and choices that you weren’t even aware of.

You Have a Complicated Tax Situation

The IRS estimates that about 2/3 of individuals will hire a professional to do their taxes this year. That’s a lot of people who already don’t want to deal with the complexity of their current tax situation.

Throw in a marriage, divorce, inheritance, sale of a business, sale of a home, or exposure to the alternative minimum tax and you’re quickly treading on turf that may best be left in the hands of an expert.

You Have a Significant Amount of Assets

Your tax situation grows more precarious as your income or portfolio grows. With a large portfolio you need to be careful of the alternative minimum tax.

Also, a financial planner can help ensure your assets are properly diversified among a number of asset classes and that your annual capital gain and loss situation is managed effectively.

You Need to Plan for the Inevitable

It’s estimated that 40% of people over the age of 50 don’t have a will or any type of contingency planning established. While cheap and quick alternatives are available, if you want all of your bases covered properly (including who you want to maintain custody of your children), plan for a visit to a lawyer or financial planner.

Planning for your death also carries serious tax consequences for your estate and those inheriting it. A lack of a will or trust can mean that your estate spends months tied up in probate court and a significant portion of it ends up in the hands of the government instead of your heirs.

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Author Info

This post was written by David Dierking. David lives outside Milwaukee, Wisconsin and has been working in the financial services industry for over 13 years with a background in investments, accounting, and marketing. He earned his Chartered Financial Analyst designation from the CFA Institute in 2004 and was recently published in the Milwaukee Business Journal. You can also check him out at The Ultimate Fit Challenge

One Response to “When Is It Time to Hire a Financial Planner?”

  1. LAMoneyGuy |  Nov 25, 2009 at 3:30 pm

    This probably falls under “You Need the Help”, but I wanted to add that an important time to consult with a Financial Planner is when there is a significant change in your life. This may mean a death of a spouse or parent, retirement, sale of a business, winning the lotto…

    Even better, begin consulting with a Financial Planner in anticipation of these events, if they are knowable in advance.