When you sell your company and all of a sudden, you have millions to invest, it can make you quite giddy. All of a sudden, your long last relatives will appear on your doorstep asking for a loan or an investment. Your niece will want you invest in her new app which is "brilliant". Suddenly, you can access wealth manages who need you to have more than $2million to open an account. These wealth managers are the elite of financial planners.
Financial planners advise clients on how best to save, invest, and grow their money. They can help you tackle a specific financial goal—such as giving you a macro view of your money and the interplay of your various assets. Some specialize in retirement or estate planning, while some others consult on a range of financial matters. At the very least, they should find out about your family.
Don’t confuse planners with stockbrokers — the market mavens people call to trade stocks.
Financial planners also differ from accountants who can help you lower your tax bill, insurance agents who might lure you in with complicated life insurance policies, or the person at your local bank urging you to buy their off the shelf mutual funds.
Anyone can hang out a shingle as a financial planner, but that doesn’t make that person an expert. They may tack on an alphabet soup of letters after their names, but CFA (short for certified financial planner) is the most significant credential. A CFA has passed a rigorous test on the specifics of personal finance. CFAs must also commit to continuing education on financial matters and ethics classes to maintain their designation. The CFP credential is a good sign that a prospective planner will give sound financial advice. Still, even those who pass the exam may come up short on skills and credibility. As with all things pertaining to your money, be meticulous in choosing the right planner.
Their firm is important. Some small planner make you pay dearly. They are smart but you end up paying more as they still have to place orders for your portfolio and they will have to pay a fee and pass that along to you.