You’re not like anyone else. Your life is filled with a set of financial obligations, costs, and rewards that are particular to you. But there is one way you’re not alone. Like so many people, you may find yourself overwhelmed with the management of your finances.
You may be looking at your retirement plan or investing in a second home. There are decisions to make about your estate. Have you saved enough to live the life you envision? It’s a lot to consider and not so easy to figure out where to begin.
The first step is to find professionals who understand you and can offer trusted expertise. So where do you start, and who should be on your financial team?
#1 Financial Advisor
Find a licensed financial advisor who is a CERTIFIED FINANCIAL PLANNER™ professional. A CFP® professional is a financial advisor who possesses one of the most rigorous certifications for financial planning knowledge. CFP® practitioners must have several years of experience related to financial planning, pass the CFP® exam and adhere to a strict ethical standard set by the Certified Financial Planner Board of Standards. Unlike some other financial advisors, they are held to a fiduciary standard, meaning they are obligated to act in their client’s best interests.
CERTIFIED FINANCIAL PLANNER™ professionals do more than provide advice on investments. They are equipped with the knowledge and skills to assess your overall financial situation and make recommendations based on their findings. Some examples include determining the best way to manage cash flows, plan your taxes and insurance needs, review your estate plan, and make sure your portfolio is invested properly.
When it comes to money, there is no such thing as one size fits all. Your goals are quite different from those of your co-workers or your neighbor. An advisor will work with you to understand your unique situation and figure out the best plan for you going forward.
You need someone who will inspire you to think about your priorities and ask the tough questions, such as:
- What are your goals, financial and personal, in the near-term and in the long-term?
- What are your fears when it comes to money? What keeps you up at night?
- How much do you spend annually, and how much will you need in retirement?
- What is your biggest regret with regard to your finances?
- What does your ideal financial life look like going forward?
An advisor can show you how to get from where you are today to where you want to be in retirement. They will lay out the timeline for the way you want to live, consider your cash needs, and help you structure finances appropriately. For some, that’s investing money; for others, it’s buying insurance. You may want to set up a trust or family foundation. You could have questions about your mortgage and the financial security of your family members when you’re no longer there to provide.
That’s why a financial advisor is a great place to start when building a team of financial pros.
Because there are many elements to your financial future, you may need to bring in a mix of experts. Your advisor can play a part in assembling the right team, which may include an accountant, a lawyer, and an insurance agent. Or they can work hand-in-hand with any existing members of your team. You may not need the services of all the professionals listed here, but it’s good to know each one’s strengths so you can assess your needs for the future.
The next most common financial professional to add to your team is a Certified Public Accountant (CPA). CPAs typically focus on accounting and tax planning, although their responsibilities can vary.
A CPA can prepare your personal and business tax returns and any other type of tax filing that you are required to file. They can also advise on specific tax situations such as:
- The sale of a property or business
- Determining the best structure for your business
- Tax planning strategies to minimize tax liability
- Income deferment
- Estimated tax payments
This role differs from a financial advisor who is knowledgeable in taxes and can examine them as part of a complete financial picture but typically does not prepare returns. Your financial advisor can help provide advice on tax efficiency within your investment portfolio, monitor your overall situation to make sure you’re staying on track, and implement recommended strategies.
That’s why it’s helpful when your financial advisor works hand-in-hand with your accountant. Your financial advisor can work with your CPA to…
- Discuss the viability of specific tax savings strategies.
- Provide updates on income/deductions throughout the year so the CPA can run projections and modify estimated tax payments if needed.
- Surface any concerns in other areas of your life that could potentially impact your taxes.
- Help organize tax documents at tax-filing time.
Some people are surprised to hear they may need an attorney on their financial team. This depends on your circumstances, but an attorney is often needed when…
- Marrying or divorcing, or after the death of a spouse.
- Estate planning.
- Buying or selling property.
- Selling or restructuring a business.
- Creating a long-term care plan for a disabled relative.
Once you begin to put your long-term financial plan in place, you may need to complete or update your will, medical directives, and power of attorney. If you have children, an attorney will help create documents related to any necessary trusts to help control when they can potentially receive funds in the future and for what purpose.
When an attorney in these areas works hand-in-hand with your financial advisor, they bring in knowledge of your overall financial situation that may be helpful in the area the attorney is focused on. Your financial advisor may also pose questions or concerns that you wouldn’t necessarily know could impact the attorney’s recommendations.
#4 Insurance Specialist
It is essential to plan for the unexpected in life. Many people consider life and disability insurance as an expense, but it is better to think of it as a solution to protect your future earnings. About a third of Americans don’t have a life insurance policy, which could leave their families with a financial hardship if they were to pass away prematurely. You may be wary of adding a new policy. That’s understandable. The marketplace is complex, it may be difficult to understand the policy features and it may be expensive. These are all reasons people end up not having the insurance coverage they need.
Adding an insurance agent to your team can help you navigate the insurance world and find the best value. Insurance is an ever-evolving industry that frequently has new products available to consumers. Insurance agents are aware of all solutions available, including life, disability, and long-term care insurance.
It’s important for your advisor to work closely with you and your insurance agent so they can coordinate together to make sure you get the coverage you need (no more and no less)—and at a good price. Many financial advisors prefer to work with an independent agent who is not tied to any one or a limited number of providers so they can truly offer you the best solutions possible.
Get Started on Your Overall Financial Plan
Planning for the decades to come can seem like a daunting task, and you don’t want to go it alone. However, there’s a challenge to getting the right players on a winning team. You may be unsure of the proper formula.
Get started with the financial advisors at Team Hewins to build a financial plan that makes sense for the most important person in your life: you.
Team Hewins, LLC (“Team Hewins”) is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas.