All Things Financial Planning Blog

Do you have a doctor, maybe a General Practitioner, who is responsible for your health if you get sick? I’ll assume you do. Does he (or she) take care of all your health issues? How about your nutrition, your exercise and your weight? No. Unless your doc is a family member, he collects physical and personal health data when he examines you, gives you advice and prescriptions to “fix” your problem, and then he encourages you to get help from a nutritionist (or your Mom), a fitness coach (or an exercise class), maybe the WebMD site, and maybe even a specialist. Your doctor is the health pro that monitors, prescribes and refers to others. He’s not your Mom, your coach, your web browsing guide or your brain surgeon.

Well, coincidentally, that’s exactly the way you should use a Certified Financial Planner™ professional (CFP^®). Your financial pro examines your financial data and gives you guidelines and prescriptions to improve your financial health and he may recommend a specialist for legal or tax advice, for example. Following your advisor’s advice will help you get out or stay out of debt. It may help you fund targeted savings and establish an emergency fund. But your CFP^® doesn’t do a lot of other things that are part of your financial health. Like your doctor, he (or she) will depend on other people and services to help you “get better”. He may set savings goals (and suggest an online banker), suggest employee benefits choices (through the benefits products and services at your job). Your financial planner may also suggest tax savings ideas that you will have to work through with your tax preparer (or with TurboTax on your own) and so forth. You may be able to remove a financial hangnail, but a financial intestinal blockage?, no way. How about a financial health club? Yep, like your doctor, your CFP^® will support your participation in that, too. He might suggest Dave Ramsey or suggest you watch an investment TV show like Cramer or check out a financial blog like J.D. Roth’s GetRichSlowly. Like your doctor, your financial planner is helping you create a sustainable environment for future health. 

Do you see the parallels? All of us need good physical health and good financial health. To attain that health, we need a professionally competent monitor/diagnostician who can prescribe the right financial behaviors and perhaps an occasional specialist to get us through a tough transition or just back on track. But with his help, we also need to create the environment that will support establishing financial health and staying financially fit. Without it, we will backslide, and become financially unfit again, unable to pay bills, put kids through college or retire, for example.

Where does the average person find the financial pros with these qualifications and the fee structures to make sure you won’t be pitched commission products? Financial advice providers should be selected to serve you at your present level of financial complexity. When you are young and your financial life is simple, time spent with a wise uncle or even Yahoo Finance or Mint.com may suffice. But, set up a short session with a pro, too. It is said that the difference between a pro and an amateur, is that a pro will panic faster when he sees something wrong. With a wise advisor’s observations and support, you’ll get early warnings about bad habits. Then surround yourself with the practices and tools that will bring long term success.

If you don’t know a pro personally, today there are highly qualified and inexpensive online advisors who will give you a free checkup and charge low flat fees for their services (Editor’s note: A good place to start for a free check up is the FPA’s Starter Road Map. Other sites include Myfinancialadvice.com, a site with which this author is affiliated. Plus,  you can use the FPA’s PlannerSearch to locate planners by compensation model as well.)

These are the types of planners that won’t expect you to be wealthy, and can prescribe tools to put a budget in place that you can follow. They may help you find an investment club to learn about mutual funds, or suggest an online resource to open an IRA or 401(k) plan where you work. They will help you establish the habits you need to reach “financial adulthood” no matter your age. Once you find an advisor who will work for you, check in with them every so often to evaluate your progress.

Attaining and maintaining good medical and good financial health have a lot in common. Both need the advice of a professional, the establishment of good habits, and an environment that supports growth and development, growing, preserving and conserving your resources. Think of these two arenas of your health the same way. Using these approaches together, you can live long and even prosper.

Special to FPA
Kevin P. Condon, Ph.D., CFP®
Partner & Co-founder
Myfinancialadvice, Inc.