Why I have a financial planner

It might surprise people that my husband and I pay a financial planner, given that I spend a lot of time on financial, tax, and investment planning at work. However, hiring a planner has delivered a return that can’t be quantified: peace of mind.

Here are some key reasons we pay for financial advice.

1) We wanted a second opinion on a few important decisions.

I wanted a different perspective on less-familiar subjects, such as handling employer stock, and whether we needed long-term care insurance. We could have confronted both issues on our own, but having professional guidance helped us move forward more confidently.

2) We found a business model that makes sense for our situation.

We were delighted to find a financial planning firm that could work with us on an hourly basis to address our specific questions, rather than ongoing portfolio management. Paying for financial advice on an ongoing basis, via an assets-under-management fee or other arrangement, can be right for some people. Shop around to find a business model that fits with the type and level of service you need. This requires clarity on what you want.

Most holistic financial planners, including ours, are uncomfortable answering questions without fully understanding your financial situation. My question about long-term care insurance seemed straightforward, but our planner could only answer confidently if she understood our retirement assets, expected Social Security, and anticipated in-retirement spending. A good-quality planner needs time to review your total situation before giving answers. (I consider it a red flag if a planner is willing to give targeted advice without a comprehensive review.) That can mean more fees than you anticipated.

3) It gave us an impetus to get, and stay, organized.

A holistic financial planner also requires you to share a lot of information—statements for all your financial accounts, tax returns, pay stubs, and so forth. If you’re paying hourly, it’s in your best interest to gather all that documentation yourself rather than turning over piles of disorganized paperwork. Gathering the documents was not a light lift, but I was able to cull a lot of financial paperwork through that process. That initial organization blitz has continued to pay dividends: We maintain just a small sheaf of financial documents and can readily access anything we need.

4) We love having a succession plan.

As an unexpected benefit to working with a planner, they now have current information on every financial relationship we have: our bank accounts, company retirement plans and IRAs, and insurance policies. Our accounts are linked to the firm’s financial planning portal so that our planner can see what’s happening with them in real-time, without needing fresh documents. Any of the planners in the firm could also access our information in a pinch. If something happened to us, our loved ones would have a one-stop resource to help them sort things out. You can keep scrupulous records and develop your own succession plan, but storing all of our documentation with a third party helps alleviate worries about records being damaged or lost.

5) A third party can help give us “permission to spend.”

My husband and I don’t deprive ourselves, but we’ve spent our lifetimes earning and saving. Turning the spending switch “on” in retirement could be mentally challenging. Our planner’s retirement projections (including stress tests for big market downdrafts and tax-law changes) have provided tremendous peace of mind. There are other avenues to help with the “permission to spend” problem, but for me a financial planner can provide a lot of value in this context. For our own peace of mind as we age, it’s a relationship we plan to maintain.

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This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-finance.

Christine Benz is director of personal finance and retirement planning for Morningstar.

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