financial planning, CFP, financial planner, financial advice

7 Ways a True Financial Planner Provides Value

I often get asked, “What does a financial planner do?” And honestly, I get it. When you pay someone to build you a house, you get a house in return. When you write a check at a car dealership, you receive a car in return. Financial advice is often not tangible, and most of the time it’s not even possible to calculate.

I wouldn’t invest my time in educating others on personal finance if I didn’t believe there was meaningful value behind it. That is why I felt inclined to make an attempt to describe the value that a true financial planner can provide. I say “true financial planner” because there are a lot of financial advisors and planners out there who misuse the title and don’t actually take the time to provide meaningful service and advice to their clients. This is often the case for any of the following reasons: they haven’t sought after or been required to get proper education, it takes too much time, or it doesn’t produce additional revenue for most “product-driven” or transactional based business.

Before I begin, quickly reflect on your potential response to the following questions:

  • How much is your time worth to you?
  • What would you do with extra time in your day?
  • How long will it take you to find the resources you need to find the answer to your financial question in mind?
  • What is the potential cost of making the wrong decision due to misinformation?
  • What would you rather be doing with your time?

Are you able to attach a value to these? It’s hard, isn’t it?

In order to paint a picture of the value that financial advice provides, I’m going to provide a list of seven ways financial planners add value. While reading them, think about how each one adds to or takes away from your main three resources: 1) Time, 2) Attention, and 3) Money. I say this because the value of advice ultimately comes down to how you personally value each of your three resources. Let’s begin.

“True” financial planners…

1. Act as a barrier between their clients and their clients own behavior and investment mistakes

These mistakes can come in many different forms. They may be small mistakes that go unnoticed or ones that you look back on as the “Big Mistake”. The true enemy of investing is the “Big Mistake” and you never know when it might come. The truth is we are all irrational with our money to some extent and it’s been proven by many research studies that it is hard to separate our emotions from our money.

Financial planners act as an emotional circuit breaker, helping separate clients emotions from their money. They steer clients away from the impulse to chase returns or run for cover in volatile markets. Some planners may even specialize in behavioral coaching, where they actually teach clients the psychology behind managing their money.

Remember, individual financial success is not driven by the performance of the market or investments, but by the behavior of individual investors.