The Pros And Cons Of Hiring A Financial Planner For Debt Advice

You might’ve heard that a financial planner is a critical piece of anyone’s economic life, but are they right for everyone? Are they only suitable for wealthy people, or can they help anyone? If you’re unsure whether or not a financial planner is right for you, use this guide to determine whether it’ll be an asset to your financial future or not. 

1. What Does A Financial Planner Do?

When you’re going through a rough patch in your finances, a financial advisor can help you find a solution or a plan to pay off debt. By working together, a financial advisor and you can plan to get out of debt and improve your finances.

In addition, financial advisors can help you strategize for long-term goals and assist with things like retirement, estate planning, and creating trusts for your family or loved ones. 

When you’re looking for a financial planner, ensure you work with a Fiduciary as they’re legally obligated to work in your best interest no matter how it affects their income. Most financial planners are trustworthy, but having the legal system behind their business gives better peace of mind that you’re getting the best advice possible and not advice that makes them more prosperous. 

2. When You Should Hire A Financial Planner For Debt Management

There are a few reasons that financial planners can be helpful for you, but it depends on how comfortable you are letting someone into your finances. If you’re not sure, here are some situations that an advisor can help with. 

a. You have no idea what you’re doing

If you’re ready to get out of debt but don’t know where to start, a financial planner can be a helpful professional to have in your corner. They’ll be able to take an objective look at your financial situation and create a strategy that has specific actions and a hard deadline for when you’ll be debt-free.

b. You’ve come into a large sum of money

Getting an inheritance, settlement, or winning the lottery can make many feel excited and terrified at the same time. A financial planner can set up your finances to use this windfall in the best way possible that pays off debt and potentially sets you up for life so that you’ll never struggle again. 

c. You want to make retirement a priority

Retirement planning is a complex area for many to navigate when they’ve been so focused on the day-to-day stuff. If you’re feeling like you need help catching up so that you’ll be able to retire comfortably and debt-free, bring on a financial planner to get a full assessment of where you are and where you need to be to bed on time. 

3. When you shouldn’t hire a financial planner

There are situations where a financial planner isn’t the right choice to help with your finances. Here are a few instances when you should seek other options.

a. You’re not wholly committed to becoming debt-free

Your advisor will be setting up a plan that reworks your finances so that you’ll become debt-free, but if you’re not able to change your spending habits, then you’ll both end up frustrated.

It would be sufficient if you committed to doing what it takes to get rid of debt, and that could involve changing how you spend money, temporarily cutting back on indulgences and hobbies, or taking on higher-paying jobs that aren’t as fulfilling as the dream job you’ve had that wasn’t previously paying the bills. 

b. Your financial planner is offering their services for free

No professional will work for free unless it’s pro-bono, so be wary of advisors that provide their services for free. Those financial planners will be getting paid somehow with things like affiliate commissions, finders fees, or other kickbacks from companies whose services they advise customers to use. 

Look for financial planners that either work on an hourly rate or have an a la carte menu of options with flat fees. It would be sufficient if you also looked for Fiduciary-certified one by the state or SEC. 

c. Your only option is the one your family member or friend uses

Just because your cousin’s friend’s uncle is a financial planner doesn’t mean they’re the right planner for you. The same goes for the financial planner your parents have used. While they may be talented advisors, that doesn’t mean they understand how your generation handles money.

If you’re a millennial, you know how frustrating it can be to work with baby boomers who don’t know how the job market works today. Now imagine having that same person handling your finances. 

Remember that everyone’s situation is unique, so just because a financial planner is great for someone doesn’t mean they’ll be great for you. Do your research and look for advisors who have experience working with people of your age and earning level. 

4. The bottom line

Overall, financial planners can help you get your debt under control. They can also help you improve your overall financial situation, from retirement planning to saving for a home.

However, it would be best to always do your research before signing on with a financial planner. Read the fine print of the contracts, check to see if they are licensed, and talk to a few other people who have had a good experience before signing on.