Do I Need a Financial Planner?
Why Financial Planning Becomes Crucial Over Time
A financial planner or advisor is a professional who helps you manage and improve your financial health. While hiring one comes with a cost, the value often outweighs the expense. In your 20s, when finances are simple, a DIY approach may work. But as life grows more complex with marriage, children, home ownership, or retirement planning, your financial needs become more challenging.
A financial planner can help you answer important questions:
Am I saving enough on taxes?
Will my family be secure if something unexpected happens?
How should I invest to protect myself during market downturns?
Do I have the right strategy for long-term growth?
These questions can feel overwhelming to handle alone. A skilled financial advisor provides clarity, protects your assets, and keeps you on track toward your goals. With expertise in tax planning, investing, and risk management, the right planner saves time, reduces stress, and supports long-term financial growth.
Tax Planning: Maximizing Savings with Expert Insight
Are you taking advantage of all your available tax deductions and credits? Should you be contributing more to tax-advantaged accounts? Do you have highly concentrated stock options or positions with severe tax consequences? A financial planner will help you answer these kinds of questions and guide you through comprehensive tax planning, which can quickly add up to thousands of dollars in savings per year.
Smarter Investment Access and Strategy
A financial planner does a whole lot of things behind the scenes that you probably don’t have the time, expertise, desire or patience to deal with. A few of these value adds include selecting investments that are aligned with your goals, values and risk tolerance, rebalancing your portfolio to ensure it remains in line with original objectives, and tax loss harvesting to save you more on your tax bill.
Most financial planner also have access to investment vehicles that aren’t available to the general public. These range from highly touted mutual funds (such as Dimensional Fund Advisors) to private equity and venture capital investment options that may be appropriate for the right investors. In addition, most planners also receive substantial discounts on the same investments that are used by the general public, and there is a direct correlation between saving on fees and higher investment returns.
Risk Management & Company Benefits Optimization
Financial planners often find ways to put more away into company retirement plans than clients realize is possible (again, directly resulting in tax savings). Furthermore, they make sure that you’re taking advantage of all the benefits and insurance coverages available through your company.
A planner will carefully examine your coverage and policies including your homeowner’s/renter’s coverage, life and disability insurance, and auto coverage. S/he can then alert you to any gaps in your coverage and/or let you know if you’re over-insured and paying too much. If you already have accumulated wealth and are underinsured, you could be at risk. Wouldn’t you sleep better knowing your insurance ducks are in a row?
Estate Planning Essentials for Your Family’s Future
Do you want a random judge deciding where your assets go when you pass away, or more importantly, who takes care of your children? If not, you need a will and possibly even a trust to assure your assets and guardianship of your children go where you want them to go and when. If you’ve started a family and have accumulated wealth then this is critical.
Furthermore, if you begin estate planning in your 30s, you could save big time later in life. Ultimately, a much larger percentage of your assets can be passed to your loved ones and charities of choice. If you wait too long to begin this process, it usually means more of your assets end up going to good old Uncle Sam.
Expertise & Professional Networks at Your Disposal
Most of us don’t want to ditch our family and friends on nights and weekends to research tax savings strategies, rebalance our portfolios, study insurance coverage and read our company benefit booklets. Furthermore, you probably don’t have the motivation, expertise or professional networks to research, construct and implement a comprehensive financial plan. Financial planners have years of expertise in dealing with these issues. Moreover, they have close relationships to accountants, attorneys and various other professionals who can better assist in these areas.
Plan Implementation: Turning Strategy into Action
What does your financial picture currently look like? How well have you done on your finances up to this point? A financial planner will coach and encourage you to consistently make wise financial decisions. S/he will also help implement most of your financial plan for you while guiding you through the rest. Ultimately, financial planners ensure that action is ultimately taken and your plan gets implemented. This proves to be the greatest value added for many folks who work with financial advisors, since navigating the world of investments, insurance, estate planning, etc. alone is overwhelming.
How a Financial Planner Can Ease Your Financial Burden
Finding the right financial advisor can be a lot of work. But if you’re feeling overwhelmed by your finances or simply want to free up time for the other things that matter in life, it’s time to start looking for a financial planner. And it’s worth building a relationship with an financial planner early on as your financial picture will most likely continue to increase in complexity over time.
Do You Actually Need a Financial Planner?
So yes, you really need a financial planner. They can save you thousands, possibly even millions, over your lifetime, and more importantly bring you peace of mind. The end result is that you should be able to retire more comfortably (and probably sooner), spend more time with friends and family, and reduce financial stress and frustration. What’s not to like?
Sources
“The Kitces Report” by Michael Kitces, Volume 3, 2015
“Quantifying Vanguard Advisor's Alpha" by Kinniry, Jaconetti, DiJoseph, & Zilbering, 2014
"Alpha, Beta, and Now... Gamma" by Blanchett & Kaplan, 2013
"Capital Sigma: The Advisor Advantage" by Envestnet Quantitative Research Group, 2015
About The Author
Ryan Sterling Cole, CFP® is a co-founder and managing director of Citrine Capital, a San Francisco-based wealth management and tax planning firm serving tech professionals, founders, and business owners. Through his studies and over 20 years of investment experience, Ryan became a firm believer in tax-efficient investing and low-cost portfolio management. His financial know-how eventually led him to be a resource for friends and family, and he quickly discovered his passion for helping others with financial planning and investing. Ryan specializes in equity compensation, taxation, and financial independence.