(By Maryalene LaPonsie)

A good financial planner isn’t going to sell you a specific product in order to make a commission. Instead, a quality advisor will listen to your goals, look at your current finances and recommend how best to move forward with your money.

Ian Kutner, an advisor with San Diego Wealth Management, was among the country’s very first certified financial planners. It’s been more than 40 years since he was certified, and he says he still finds that people overlook the value of a planner and misunderstand what they do.

“Sometimes people think a planner might be employed by a particular insurance company and direct [clients] into investments sold by that company,” he says.

On the contrary, a good financial planner isn’t going to sell you a specific product in order to make a commission. Instead, a quality advisor will listen to your goals, look at your current finances and recommend how best to move forward with your money.

While you don’t always need to work with a planner on an ongoing basis, there are times when it makes sense to stop in for a consultation and a financial check-up.

1. When you get your first job.

It doesn’t matter whether it pays $20,000 a year or $200,000 a year, your first job is a good reason to check in with a financial planner. Not only can they advise on how best to begin saving for retirement, they may also provide insight on how to maximize your employer’s benefits package.

“You may not engage with a financial planner for years after that,” says Keith Klein, a certified financial planner and owner of Turning Pointe Wealth Management in Phoenix. “But go in for an initial consultation to learn about how all [your financial options] work.”

2. When you get married or divorced.

Another good time to get input from a financial planner is whenever you enter or leave a marriage. Bringing in an unbiased third party can help minimize financial losses in a divorce and may make it easier for engaged couples to have conversations about combining assets and income in marriage.

“One of the biggest reasons people should work with a financial planner is so that they don’t make emotional mistakes,” says Richard Wald, managing director of Merrill Lynch Global Wealth Management. For example, a spouse might feel attached to a family home and insist on keeping it as part of a divorce settlement. In exchange, he or she may lose out on retirement savings that could prove to be much more valuable in the long run.

3. When you receive a large sum of cash.

Receiving a large sum of money, such as from an inheritance, bonus, buyout or big raise, should be a boon to your financial health. Unfortunately, many people to squander the opportunity it presents.

A 2012 study from Ohio State University’s Center for Human Resource Research found most people save only half the inheritance money they receive. In the study, 826 people received an inheritance, with the median amount being $11,340. Of those, one-third saw their overall wealth remain the same or even decline after receiving an inheritance, apparently as a result of poor financial decisions.

Regardless of the amount of your windfall, meeting with a financial advisor can ensure you put the money to good use. “People think they need $1 million to work with a planner,” says Cecilia Beach Brown, a certified financial planner at Lincoln Financial Securities in Annapolis, Maryland. “Nothing could be further from the truth.”

4. When you need to take care of aging parents.

Kutner says people should think outside the box when considering how a financial planner can be useful. “Aging parents want to stay in their homes, and how do you pay for that?” he says. “It’s amazing how much a financial planner can [help].”

According to Genworth Financial, the average annual cost of a home health aide is $45,760. If you think your parents or another elderly loved one will need care, either in-home or in a nursing home, talking to a financial planner sooner rather than later can help you prepare for this sizeable expense.

5. When you are thinking about retirement.

Retirement planning is one area where financial planners shine. However, to make the most of their advice, you need to consult with a planner well before your expected quit date.

“Would you plan a vacation a day before you leave?” Kutner asks. Likewise, retirement planning shouldn’t be left to the last minute.

Klein says you should begin planning in your 50s, at the latest. “Some of the best strategies for retirement income need to be set up 10 to15 years in advance,” he says.

However, that doesn’t mean you can’t begin consulting with a financial planner even earlier. “Everyone around age 40 should check in with a planner just to see where you stand and what you are not thinking about,” Brown says. By taking stock of your situation 20 to 30 years in advance of retirement, you still have plenty of time to make adjustments and save more if needed.

6. When you are preparing to pass on your wealth.

At some point, you and your money will be parted forever. When you start to think about estate planning, it can be smart to bring in a professional for the discussion. A financial advisor may be able to suggest ways to minimize estate taxes, plan for final expenses and review beneficiary details on accounts.

7. When you are worth a quarter million.

In most of the above cases, you may only want to pay for a single visit with a financial advisor, or ongoing consultation may not be necessary. However, once your income and assets reach a certain point, you may want to develop a regular working relationship with a planner who can keep you in check. According to some financial experts, a quarter million in assets is a good time to step away from your investments and let an objective third party step in.

“Once people accumulate $150,000 to $250,000 in assets, they begin to react a little too emotionally to their money,” Klein says.

Wald says bear markets and volatile market conditions make it difficult for people to be prudent with their money. Rather than allow a market to stabilize, they may react in fear, sell off declining investments and then lock in their loss by missing the inevitable bounce back in fund values.

Beyond helping you make rational money decisions, a professional advisor can help decipher increasingly complex tax laws and investment strategies that apply to high-income earners. “Once you have over $500,000 in assets, an entirely new investment world opens to you,” Brown says.

Even if you’re a savvy money manager on your own, you may find value in bringing in a professional from time to time.

After all, Klein says, “even professional athletes have coaches.”

Source:   money.usnews.com

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