Financial Planning for All

Are you celebrating the upcoming World Financial Planning Day by creating a financial plan? I’m guessing that the answer is no, because according to the 2018 Charles Schwab Modern Wealth Index, about a quarter of Americans have a written financial plan. That’s too bad because having one “can lead to better daily money behaviors.”

Respondents who did not have a plan, site the age-old culprits – believing that they do not have enough money, not knowing how to get one or never considering one. But with the advent of technology, creating a plan may be easier than most think. On line platforms, like Betterment (the sponsor of my podcast, “Better Off”), Wealthfront, Personal Capital as well as old school players like Vanguard, Charles Schwab and Fidelity, and their more expensive cousins in the brokerage world, have all expanded their digital services to include investing and advice. If you have a more complicated situation or simply like dealing with a human being, these services have started to combine technology with real people to help you out. The fees are usually reasonable, with most ranging from 0.25 to 0.5 percent annually, though some go as high as 1 percent.

Of course, if you are a person of a certain age (ahem, like the one writing this article), after you visit the websites of these platforms, you might notice that they seem to be geared towards younger users. That’s not an accident. The services started with users “who are comfortable using a digital interface with minimal to no human contact,” according to a recent article from Knowledge@Wharton. Considering that those over 50 hold about 80 percent of investable assets and that this very group is likely to face a dizzying array of retirement and Social Security decisions, as well as worrying about their aging parents and adult children, the hyper focus on the tech-savvy, under 35 crowd could be a mistake.

For those of you who want to engage an advisor, whether online or the human variety, you should still be asking important questions.

1. Do you put your clients’ interests first AT ALL TIMES? This is also known as the fiduciary standard and most online platforms adhere to this important, legal concept. As of October 1, 2019, the CFP Board will broaden the fiduciary standard for CFP? professionals, effectively requiring them to put a client’s interest first at all times. That said, there’s no need to wait a year before engaging someone who puts you first at all times. Many CFPs already adhere to the standard at all times, as do CPAs with the Personal Financial Specialist (CPA-PFS) credential, CFA’s and those financial planners who are members of the National Association of Personal Financial Planners (NAPFA).

2. How will I pay for your financial planning services? Planners can be paid in several ways: through asset management or hourly fees, commissions or a combination of both. As part of your written agreement, your planner should make it clear how he/she will be paid and should estimate what those costs are likely to be for your specific circumstances.

3. What services do you offer? Some planners prefer to work with clients whose assets fall within a particular range or focus on specific areas, like retirement or education funding or tax planning. Be sure that your needs match the advisor’s expertise. Additionally, is the firm a one-stop shop, where you will receive comprehensive advice and the purchase of investment or insurance products? If not, ask under which circumstances the planner might bring in another professional, like an insurance salesperson, an attorney or a CPA.

Have a money question? Email me here.