My friend, Abigail Hollar, is a financial planner at Conger Wealth Management. Financial planning and estate planning often go hand in hand. Financial planners help a person plan their finances so that they will have adequate funds to support them during their retirement years. Estate planners help a person plan the disposition of that property upon one’s death and to do so in a way that is efficient and easy on the surviving family members. Abigail wrote the following article for me to share with you about why a person should hire a financial planner.
Why Hire a Financial Planner?
My friend Nick asked me to talk a little bit about why you should hire a financial planner. I wracked my brain to come up with uplifting, positive reasons to hire a financial planner. That didn’t work out so well, because there’s only one powerful, all-consuming reason to hire a financial planner. It’s because you don’t want this to be the story of your life:
"At the height of his corporate career, [redacted] was pulling in a salary in the low six figures as a marketing executive and flying first class on business trips to Europe. Today the 77-year-old juggles two part-time jobs: one as a $10-an-hour food demonstrator at a Florida Sam’s Club (WMT), the other flipping burgers and serving drinks at a golf club grill for a bit more than minimum wage.
"While [redacted] worked hard his entire career, paid off his mortgage, and put his kids through college, he didn’t put enough away for retirement—like most Americans. Even many affluent baby boomers who are approaching the ends of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their living standard in old age. For middle-class households with incomes ranging from the mid five to the low six figures, it’s especially grim. When the 2008 financial crisis hit, what little [redacted] had saved—$90,000—took a beating, and he suddenly found himself in need of cash to maintain his lifestyle. With years if not decades of life ahead of him, he took the jobs he could find." From Bloomberg Businessweek
This is pretty much the worst-case scenario for most people I’ve counseled. How could something like this happen?
"So in 1980 he started a consulting company, with [redacted company] his main client. In flush years he earned about $120,000 from clients… He saved for his kids’ college and helped his elderly parents, but retirement wasn’t on his radar. “I never thought I’d live this long,” he says.
Because [redacted] was self-employed, he didn’t have a 401(k), and he has never had a tax-deferred individual retirement account. … When the financial crisis hit, [redacted]’s savings, which he’d invested mainly in stocks, shrank from about $90,000 to less than $40,000. “I was shocked by how fast I lost so much,” he says.
This. This is why you hire a financial planner. A financial planner should tell you that, yes, you should plan on living longer than age 77. A financial planner should tell you that, while caring for your parents and children is important, so is caring for yourself. A financial planner should also let you know that, no, $90,000 isn’t nearly enough retirement savings and it’s generally imprudent invest in a portfolio primarily in stocks while you’re approaching retirement. A financial planner can also help a self-employed person set up their own retirement savings plan. Just because you don’t have an employer, doesn’t mean that money can’t be put away for retirement.
Just in case you think that this is just an example of one unfortunate, unwise person, think again. I have personally met other people in similar situations; people who thought they were on track, but weren’t, or people who just didn’t realize they were so financially off course. This isn’t a case of someone’s failure of character, or stupidity. Instead a simple oversight or two were made. The value financial planners bring is that they help you make sure you haven’t made those one or two mistakes that can derail your whole retirement. Because, that’s what seems to have happened here. It sounds like the subject of the article made only two mistakes: he didn’t save enough, and he was exposed to too much risk. These are easy, easy mistakes to make. Normal, human mistakes.
Think of it this way. You hire dentists to take care of your teeth and doctors to take care of your health. I bet you even have someone else cut your hair. Sure, you take care of your teeth, health, and hair daily, but you still have professionals help you. If you’re willing to hire a specialist to help you with your hair, doesn’t it also make sense to hire a specialist to help you take care of your money?