A financial planner is a professional that can help you plan and work towards your long-term money goals. Your current financial situation is irrelevant – a good financial planner will help you regardless of your starting point.
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According to a report from the Royal London and the International Longevity Centre (ILC), people who seek financial advice boost their wealth an average of £47,000 over the decade following the advice. So while hiring a financial planner can seem costly at first, it can definitely become a good investment in the long run.
Let’s take a look at what a financial planner does, whether you need one and how much they cost.
What does a financial planner do?
Financial planners work based on ‘the big picture’. When they take on a client, they analyse their goals and then figure out a financial roadmap to make those goals happen.
So, for example, a financial advisor would work to answer a question like “how can I invest my money?”, while a financial planner would focus on your goals and instead ask you “what do you want to achieve in life?”
While a planner might help you invest, open a pension plan or buy other financial products, this is just part of a bigger plan to get you closer to your goals. And because these tend to be lifelong goals, financial planners often have ongoing relationships with their clients. This allows them to adjust plans and goals as circumstances change.
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When do I need a financial planner?
There’s no wrong time to hire somebody to help you take charge of your finances. But there are some specific instances when having financial guidance definitely makes sense.
For example, if you’re getting close to retirement, you should take a closer look at your financial situation. Do you have enough money to retire comfortably? If not, what can you do to improve your situation in the next few years?
Money milestones, such as getting a significant raise or receiving an inheritance, are also good times to re-evaluate your finances. Additional money coming in brings new opportunities for investment and ways to increase your overall wealth. A financial expert can guide you on the best ways to use that money to achieve your long-term goals.
The same is true of big life changes, including having a baby, going through a divorce or selling a business. These changes give you a chance to re-evaluate your financial situation and reorganise your savings so that you can create a new plan.
How much does a financial planner cost?
Financial planners usually work on a fixed fee basis or charge by the hour. They very rarely charge a percentage of your investments or assets – a common practice among financial advisors and other financial professionals. Since planners usually don’t sell investment products, they don’t earn commissions or have other forms of income.
The average financial professional in the UK charges £150 per hour or fixed fees of £1,000 or more. This is in addition to any expense incurred in buying products such as insurance, investments and more.
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