Coming up with a financial plan is a daunting task for some. It can be easy to glaze over when financial talk turns to retirement savings plans, mutual funds and stocks and bonds, but that is what financial advisors are for: to help those looking to be financially independent plan for the future and invest their money in the best way possible.
Financial life planning can be thought of in the same way as planning to build a house or going to a doctor, according to local financial advisors.
"Working with an advisor can help you build a plan suited to what you need," said First Wealth Management investment specialist Barbara Cooper. "For instance, a 30-year-old is going to be totally different than a 70-year-old, and it's the same if you buy a split-level house when you have children, or go into a rancher when you are older and ready for retirement. Financial plans, just like houses, are designed for the investor and what their specific needs are."
Instead of comparing financial life planning to buying a house, Investors Group Financial Services Powell River division director Scott Mastrodonato equates the process to going to see a doctor.
"It's really no different than telling your doctor what your medical ailments are, so they can give you a diagnosis and suggest ways to make you feel better," said Mastrodonato. "So we're financial doctors, in some respects. We can give advice that will be most valuable to each person's circumstances."
According to Mastrodonato, a number of factors come into play for creating a successful financial plan, including having set goals and objectives.
"It's important to know exactly where you are financially today," said Mastrodonato, "not necessarily exactly where you want to get, but having good information and goals and objectives can help your financial planner set out a map for you to achieve them."
Many types of investments are available to choose from and different products are suitable for different life situations, said Cooper. But financial planning is more than just setting up a retirement savings plan or buying mutual funds, she said.
"Say you are a brand new investor and starting your first real job, financial advisors will take into account all of your needs, from life insurance to education savings plans for your children. So even though you think you have $100 to just put into savings, that might be divvied up to include something like a life insurance policy, because you have little junior on the way," said Cooper. "A financial advisor will give you other ideas that maybe you hadn't thought of yet."
Setting goals is an important part of financial life planning, said Cooper, and short-term and long-term financial goals, while often completely different scenarios, can be equally important.
"If you want to save up for a car, or a down payment on a house, that's a totally different thing than thinking, 'Oh, I'm going to retire in 35 years,'" she said. "Short-term goals might require more money in a shorter period of time, but the long-term ones, if you put $75 a month away and let it sit for 35 years, you're going to have some big money at the end of it, for sure."
Mastrodonato said it is important for anyone doing long-term financial planning to have a team of professionals to rely on, including advisors, accountants and lawyers. Lawyers tend to look at estate issues, such as creating a will and power of attorney, and those issues have financial consequences, he said.
"I wouldn't expect a lawyer to be giving financial advice and I wouldn't expect a financial advisor to be giving legal advice," said Mastrodonato, "but we share a common need to keep each other informed and work together for the client."
A common misconception is that without disposable income or an extra reserve of funds, it is impossible to begin a financial plan or set up investments. Mastrodonato said he comes across a lot of clients who are able to find some of the solutions they are looking for once they reach out to a financial advisor and come in for a consultation.
"Using full disclosure of your own personal circumstances will allow a planner to offer suggestions," said Mastrodonato, "and hopefully solutions that may create the cash flow that allows you to work toward your financial goals."
A key to solid financial planning is finding an advisor who you "click with" and can trust, said Cooper. A good advisor is willing to help everyone, regardless of how much they have to invest, she said.
"We always want to see all of our clients succeed and we like the little guy,” said Cooper. “Some people say, ‘I don't have any money.’ Well, then come and see us and let's see if we can get you going. If you don't think you have anything to start with, you do, we just need to figure out where it will come from."
