As a financial planner, I notice news reports urging people to utilize financial planning services, especially the ones claiming “everyone” should work with a financial planner. Recently, I came across this short commentary on CNBC:

While I agree with many viewpoints expressed in this video, it’s the assertion that “everyone needs a planner” that somehow troubles me. The more I talk to people about financial planning, the more I find that people with a certain type of personality are more likely to engage and benefit from a financial planner. For lack of a better term, I would call this a “planner” personality.

The tendency to plan is human nature, but it also varies on a wide spectrum. We all know one or two people in our lives who are super organized, think ahead, and have their future planned; but we also know people who don’t. If you believe in living in the moment or that the world is coming to an end in six months, it is likely you will not feel the need to have a financial plan. On the flip side, it is the people who have the “planner” personality that will tell you, sometimes with a judgmental attitude, that you need to “grow up” and plan ahead. For people without the mindset of planning for the future, a financial planner’s helpful words of wisdom are of no value to them. Even if you give them personalized advice for free, they will not feel the need to follow it.

So to put the assertion in perspective, I would rephrase and say, “Everyone who has thoughts about planning ahead can use some help from a financial planner.” If you have felt the need to learn more, to seek advice, to come up with a plan, or to force yourself to stick to a personal finance plan of any kind, then you will probably benefit from what a financial planner can offer.

But what kind of financial planning service should you look for? How can you know your needs will be met?

From my experience so far in working with clients, I find that it is useful to evaluate yourself on two spectrums. First is the ability and willingness to obtain the knowledge needed to create an effective plan; and second is the level of motivation and ability to organize to implement a plan.  Using these two spectrums, I roughly categorize financial planners that may meet your needs in the following four categories:


#1: Manager

Historically, delegating your financial matters to a professional manager is the only option when you need financial advice. You have strong motivation to get your finances in order, but lack the time and knowledge to do it yourself, so you hire someone to do it for you. The majority of the financial advice industry still operates in this capacity. If you have accumulated enough assets but have no desire to understand how to manage them, it may be in your best interests to find a wealth management firm to plan and manage your investments in light of your life goals and financial situation. However, many advisers that function as asset managers do not accept clients that have small asset balances because of the work and responsibility involved.

What if your main deficiency is not lack of financial acumen, but of motivation and organization skills? You may need the following two types of planners.

#2: Coach

If you have this lingering thought in your head, “I should really learn to manage my finances better,” but haven’t taken the first step toward that goal, what you need is a financial planner that acts like a coach: he/she not only tells you what to do, but also teaches you the game. I believe that the majority of people fall into this category not necessarily by choice, but because all the demands of life strip you of the time to really understand what you should do, and the motivation to put a plan into action. The traditional financial planner that manages your assets or provides advice on an hourly basis may not be suitable for you when your needs are to be kept on track and educated in financial matters that you have no time to research on your own.

Fortunately, many financial planners have noticed this need and begun to offer services on an on-going basis. (I personally work with clients under this model.) You are paying not just for one-time advice or a comprehensive plan, but also for a reliable coach that makes sure you continually grow in your financial knowledge and confidence to act.

#3: Trainer

Some people, financial professionals included, have the wealth of knowledge necessary to manage their personal finances; however, they never get around to doing it. I’m talking about you- who knows that you should increase your 401(k) contribution now that you have paid off your student loan, but forgot your online account password and didn’t bother to reset it. It is an inertia that many people suffer from, some more than others. That is why you need a financial planner that acts like a trainer, who like a physical trainer keeps you accountable by counting your squats and monitoring your progress.

Many people in this category reject the idea of seeking financial advice from a planner because they think they know what to do. You may know what to do, but knowledge that doesn’t translate into action is useless. You may want a financial planner who can provide continuous support like a coach, or who can work with you at least once annually to make sure you are implementing the plan you set out to follow.

#4: Expert

It you are interested and knowledgeable in personal finance, and are highly motivated and organized with your own finances, what better career can you have than being a financial planner that helps others do the same? I personally discovered this profession because I belong to this category, and I expect most of my financial planner colleagues to be in this group as well. You may have an uncle who is a “finance guru” in the family who never engaged in professional help, but is able to manage his finances through self-study and research. If you think you belong to this category, you will most likely benefit from planners who have specialized knowledge in topics beyond your reach as a novice. Although you don’t need step-by-step instructions and a push to implement your plan, you may need an expert who can answer your questions once in awhile. A planner who is able to offer flexible hourly consultations and has a wide referral network would serve your needs the best.

In the internet era, there are also advisers who are willing to answer your specific question online for a small fee. You may want to check out NerdWallet or JustAnswer if you are a DIY person.

You may also be interested in “How to build a fruitful relationship with a financial planner“.

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