What Does A Financial Planner Do?

Money isn't everything, but not having it is - Kanye West ⛷

While there's many things in life more important than money, money can be viewed as a tool to help you get where you want to be and give you the time freedom to do those things.


Sometimes it's easy to manage your personal finances yourself, but sometimes life gets in the way and things can start to get more complex.


Working with a financial planner means that you have a dedicated professional to help answer questions and give you the advice you need to reach your life goals.


One way a financial planner helps is acting as an accountability partner.


I believe the accountability factor is one of the most overlooked benefits of working with a financial planner. When you decide to manage money yourself, it requires a lot of time, responsibility, and commitment.


In a way, a financial planner can be viewed like a personal trainer. People hire personal trainers to reach a desired fitness goal and people hire financial planners to reach a desired financial goal.


Working with a personal trainer can increase your chances of success because they’re helping you with workout plans and holding you accountable, much like a financial planner.


Another benefit of having a financial planner is that they act as a teacher🤓


If you've ever felt like you don't know as much about money as you should, it's not your fault.


Our current education system doesn't prioritize financial education so we must take it upon ourselves to become educated and learn from others.


A true financial planner will not only help you get where you want to be, but will also help you understand why certain decisions are better than others.


“If you need a financial advisor or counselor, look for someone with the heart of a teacher”


Areas a Financial Planner Can Help



Life Planning


In my opinion, this is one of the biggest impacts a financial planner can have on your life.


This is also one of the main differences between a financial planner and a financial advisor.


Generally, financial advisors only help select and manage investments 💰


Financial planners help you develop a clear path of where you want to go in life and provide you with a plan to get there. Financial planning also includes investment management, but there's many other areas of personal finance that need attention other than just saving for retirement.


ALSO READ: 4 Reasons to Work With a Virtual Financial Planner


Goal Setting


Proper goal setting can alter the course of your life. It can encourage deep thinking to truly understand what you want to achieve and helps create the “why” behind what you’re doing.


Which of these two scenarios do you think has a higher chance of success? 🤔


Scenario #1 - You’re saving $500/month because someone told you to

Scenario #2 - You’re saving $500/month because after one year, you know you can take that vacation to Bora Bora you’ve always dreamed of


Cash Flow


Cash flow can simply be thought of as money coming in (income) and money going out (expenses). Establishing where your money should be going every month is a vital part of achieving your desired goals. A financial planner helps prioritize where money should be going to ensure goals are reached.


Without a proper cash flow plan, it’s easy to overspend and not even realize it.


How many times have you checked your bank account only to realize there’s less money than you were expecting? 😅


Debt Management


Having debt is a weight on your shoulders that feels like it’s never going to go away.


It can impact your mood, your views on money, and ultimately discourage you from reaching financial independence.

A financial planner will help break down your different debts, determine the best way to approach them, and give you a clear plan on what needs to be done to become debt free.


ALSO READ: Is a financial advisor worth it?


Tax Analysis & Planning


One of the few places where you can see immediate returns is on taxes. Tax laws and regulations are constantly changing and it’s important to understand how they can be applied to your situation to reduce the amount of taxes you owe.


This can be as simple as adjusting your paycheck withholdings to keep more money throughout the year and can be as complex realizing certain gains and losses to keep you in a lower tax bracket. A financial planner can evaluate your tax situation and ultimately help you keep the most money in your pocket come April.


Investment Strategy & Management


A financial planner helps takes the guesswork out of your investments. Going DIY with your investments is doable, but also requires a lot of time and commitment to make sure your portfolio and strategies are in line with your goals.


A financial planner also acts as a mediator between your investments and your emotions.


If you logged in to view your investments back in March 2020 and saw that the market crashed and you lost thousands of dollars, it's easy to panic sell because you don't want to see your money disappearing.


However if you sold your investments, you would have also missed out on the stock market hitting all-time highs this year.


Risk Management


When it comes to personal finance, reducing your overall risk can be one of the most overlooked, yet most important pieces. Risk management covers items such as making sure you’re covered with appropriate insurance, not overpaying for insurance, and having an estate plan.


While you might not think these areas are a priority in your life right now, unexpected hospital visits happen and medical bills can add up quick if you’re not properly covered.


☯️ Finding the Right Partner


Now knowing what a financial planner does, you may be wondering how to find the right one for your situation. While it’s definitely not an easy task, finding the right planner for your situation can be one of the best financial decisions you can make.


You may have to meet with several planners before you find the right one for you and there’s nothing wrong with that.


Chances are there’s someone out there that specializes in the areas you need help with and sometimes it just takes a little time to find them.



The Bottom Line


There’s many misconceptions about what a financial planner does and how they can help.


While there’s no one-size-fits-all answer, financial planners are here to help get you where you want to be.