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When do you need a financial planner

By Sam Instone - June 21, 2018

It was February 12, 2002 and as a young Army officer I was sitting on my tank top listening to the radio.

Donald Rumsfeld, the US secretary of defence, was known for being decisive and confident.

He was talking about Afghanistan. 

Rumsfeld said:

"There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. These are things we do not know we don’t know."

Think about it for a minute.

Here is the man charged with guiding the war efforts during a time of instability arguing that there are risks we know about (those can be managed) and there is this other category of risks that we don’t know about.

In fact, we don’t even know that we don’t know about them.

16 years later, I’d argue the same is largely true of finance.

Our recent value of advice series talks about how, in the right situations, a financial planner can make your life easier

But the problem is that most people don’t know how to identify a financial salesperson from a financial planner.

They just don’t know what they don’t know.

Regardless of the vast amount of information now available online, including the ability to become a DIY investor...

As a high-performance executive, your situation is unique.

And often it can help to get professional advice.

So, when does it makes sense to hire a financial planner?

And when not?

Hire a financial planner if…

1. You’re a high earner

If you’re a high earner (£100,000 pa+), chances are you are time-poor.

You may have the ability to save a lot of money but not know the right way to take advantage of the various structures and facilities available to you.

Private banking, Lombard lending, cashflow planning and evidence-based investment – can all protect and multiply your wealth.

2. You have a high net worth

Higher-net-worth individuals (£1 million+) also have a unique set of financial issues.

From coordinating large balances spread across different types of accounts, to advanced estate and tax planning strategies, there’s a unique skill set involved in efficiently managing an especially large amount of money.

A boutique, fee-only financial planning firm dedicated to helping high-net-worth individuals should be your first port of call.

2. You’re nearing or in retirement

There are big financial questions that retirees and near-retirees have to answer, such as:

  • Am I financially ready to retire? Or...
  • What’s the best strategy for withdrawing from my various retirement accounts in order to both meet my needs and make my money last as long as possible?

Both have a big impact on your retirement lifestyle.

Neither are easy to answer on your own.

Each has a number of nuances and strategies that can be difficult to understand or implement without the help of a professional who knows this stuff inside and out.

Most people in this stage of life could at least benefit from a one-time consultation with a financial planner who specialises in retirement planning.

3. You’re starting a family

Getting married and having kids both introduce a lot of new financial challenges.

From joining finances to managing the new costs of having children, you will have a lot of financial responsibilities on your plate.

Then there is estate planning, life insurance, university…

A good financial planner will help you navigate and prioritise all of these responsibilities so that you can create a secure and enjoyable life for your family both today and in the future. 

4. You have a very specific planning need

Certain situations call for specialised knowledge that many people, and for that matter many professionals, don’t have.

Expert witness, divorce, borrowing a lot of money etc.

Caring for a family member with long-term care needs involves a much different set of planning strategies than most people encounter, for example.

The real value of a good financial planner is in helping guide you around life’s obstacles and secure a better life.

They can help you make better financial decisions and take full advantage of the opportunities available to you.

And on top of that, there’s the peace of mind that comes from knowing that your finances are on the right track.