The key to successful financial planning is to start as soon as possible. As you are just starting on your career path, changing jobs, life planning, accumulating wealth, getting married/divorced, tax planning, inheriting funds, losing your partner, or strategizing for a smooth retirement, everyone can benefit from working with a financial planner. There is truly an investment strategy for everyone who is earning and saving money.

Think about how much spare time you have in your life to properly manage your finances:

1. I have plenty of time
2. I could make the time
3. My days are completely full
4. I don’t even want to think of adding financial planning to my to-do list

Even if you have the time, do you possess the knowledge, skills, and desire to craft a comprehensive financial plan that can serve as your wealth map to help you avoid common pitfalls of wealth management? Do you know what the pitfalls are? If you are not feeling emotionally ready to hire a financial planner, it may help to consider the reason(s) why.

Are you?

1. Ashamed of your financial history and embarrassed to address it
2. Confused about where to begin
3. Unsure that you have enough money to hire a professional
4. Intimidated by advisors and don’t know who to trust

At SGL, we are here to support you with honesty, integrity, and empathy. We understand the financial hardships that people endure. You can feel safe with our team that is here to help you reach your financial goals.

Do your due diligence and research as much as you can when researching potential advisory services. The top professionals that you like should be added to your list of advisors to contact. By making calls and reaching out on their website, see how long it takes to get in touch with them, and how they respond in the written form.

When meeting with a financial advisor or CFP®, it helps to go in prepared. Go in with this list of questions, and add your own that feel important to you:

1. What kind of clients do you work with?
2. What are your qualifications?
3. Are you a fiduciary? If so, are you upheld to act as a fiduciary all the time?
4. What is your minimum requirement?
5. What are my all-in costs? 
6. What will our working relationship look like? 
7. How often will we go over my portfolio performance?
8. What is your investment philosophy? 
9. What asset allocation will you use? 
10. What investment benchmarks do you use?
11. Who is your custodian? 
12. Why should I work with you versus another firm? 

Before committing to a financial advisor, it’s important to make sure you’re hiring the best person for you and your financial situation. The financial advisor you select should check all your boxes, including understanding their credentials.

The letters at the end of a professional’s name hold meaning. With the precious responsibility of managing your wealth, you should make sure that they fit the bill. The main designations and industry credentials include: 

The terms financial advisor and financial planner are often interchangeable. 

A financial advisor provides expertise for their clients’ decisions around money, personal finance, and investments. They may work as an independent agent or be employed by a larger financial advisory firm. Registered advisors are required to pass one or more exams and be properly licensed to execute business with clients. 

Financial advisors provide direction, counsel, and make informed decisions on behalf of their clients, unlike stockbrokers who execute orders in the market. Financial advisors are paid based on a commission, fee, profit-percentage structure, or a combination.

CERTIFIED FINANCIAL PLANNER™ (CFP®): they commonly provide help with financial planning, taxes, insurance, retirement, and estate planning. A vital aspect in finding the right CFP® is to check that they have a fiduciary duty; this means they are required by legal oath to make decisions on behalf of their clients, with their best interests in mind. This also ensures there are no conflicts of interest. 

Certified Estate Planner® (CEP®): If you forget to include an estate plan in your retirement planning process, something is missing, and a Certified Estate Planner can help. A CEP® creates long-term plans for assets and wealth and makes sure directives are transparent. Typically, their efforts include plans for intergenerational wealth transfers using trusts, wills, insurance and/or arrangements for philanthropic bequests.

Certified Public Accountant (CPA): A licensed accounting professional is not always found within financial planning firms, which is a huge perk. They can also perform income tax preparation, tax planning and tax savings strategies, auditing, managerial accounting, forensic accounting, and information technology. 

Chartered Financial Analyst (CFA): is a certified financial analyst who passes three levels of exams covering economics, accounting, ethics, security analysis, investment analysis, and money management.

Chartered Financial Consultant (ChFC): studies financial education and applies practical experience. Their degree includes employee benefits planning and estate planning. CEUs are required to maintain this certification. 

At SGL Financial, you have access to CEP®, CFP® and CPA professionals in-house, like a one-stop shop, to provide comprehensive financial services, tax planning, and preparation services. Not all financial advisors are fiduciaries, but all SGL Financial advisors are, and they will always have your best interests in mind at all times.

No matter your ambitions or age, hiring a licensed professional can be one of the smartest moves for people in all life stages. When it comes to transitioning into your golden years, working with a knowledgeable planner can help you ten-fold.

A financial ally can help you: 

• Discover your true retirement goals
• Budget effectively 
• Plan for health care and health insurance
• Pay down your debts now versus later
• Invest in passive income
• Nail down your investment strategy
• Explore post-retirement income like a 401(k) plan

Retiring early isn’t impossible, but it takes hard work, sacrifice, and a solid investment strategy. At SGL Financial, we’re here to help you make your dream retirement come true. Retirement planning doesn’t have to feel like a hassle. With fee-based comprehensive investment management to rely on, you can rest assured that you are covered.

Read: Average Return or Consistent Returns: Which Is Better for Retirement Planning?

How will you know if you are using the right retirement plan? There’s not a universal “best” retirement plan for everyone, but there are a few basic things you can keep in mind: diversify your portfolio, be conservative with your spending and aggressive with your saving, maximize employer contributions, and minimize tax obligations to put yourself in a better position to settle down.

Depending on your risk tolerance and time horizon, your investment strategy will vary from others you know. That’s because these factors are dependent on your age, assets, and the time you need to access your funds. 

If you are in or nearing retirement, your investing approach will look different from your working years. In this case, your focus should be on lowering your investment volatility and protecting the assets. The hope is that you’ve accumulated a nice nest egg from long-term investing versus chasing big short-term returns. 

A financial advisor in Buffalo Grove, IL, will help you remain committed to following a road map for retirement investing before exiting the workforce, to avoid fear-based reactions to your investments during extreme market conditions. To help protect your investment during volatility, we understand the importance of keeping your retirement and/or investment portfolio steady. A financial advisor at SGL will serve as an important asset in your investment planning, ensuring you have the right tools to achieve your dreams.

In order to plan for retirement while in the workforce, a wise investment strategy should include:

• Having plenty of cash on hand
• Continuing to save
• Making small investment changes (if you must)
• Adopting a defense strategy
• Diversifying your portfolio
• Investing for the long-term
• Using dollar-cost averaging
• Keeping track of your investments
• Learning from your mistakes
• Avoiding day trading
• Avoiding emotional responses to market tumbles

Financial advisors should be worth their weight in gold, as they help you remain level-headed and committed to staying on track in building wealth. After all, they have created a comprehensive financial plan tailored to you. Because this is a highly useful service, financial professionals have different pay structures to justify what they charge. 

According to a survey by the FINRA Investor Education Foundation, 17% of investors do not know what they are paying in investment fees. An additional 14% do not know if they’re paying any fees while 60% of those working with one do not think they are paying for that advice.

Because of these numbers, it’s highly advisable to get pricing and fee structure in writing, as well as explained to you verbally. To add to your above list as a guide when interviewing different financial planners, add these compensation questions to your list:

• How do you get paid?

• Do you earn a commission? If so, how?

• How much money are you and your firm making to put me in this investment? 

• What are my total costs for working with you?

Financial advisors get paid in three different ways: fee-only, commission, or fee-based.

Fee-only advisors are paid an annual, hourly, or flat fee.

The typical fee-only structure is to charge an assets under management (AUM) percentage. This is when advisors deduct their fee from your account balance on a monthly or quarterly basis. 

For example, let’s say you have $1 million with your advisor charging 1% of AUM. In this case, you would pay just over $833 per month or $10,000 per year in fees. A standard fee is 1%, but since some advisors charge based on a sliding scale, get this in writing.

This means that the more assets your advisor is managing for you, the lower your fee percentage could be. According to an AdvisoryHQ survey in 2021: 

• A $1 million account paid 1.02% to their financial advisor on average 
• A $50,000 account paid closer to 1.2% on average
• A $30 million account paid 0.59% on average

Commission-based advisors are paid through the investments they sell.

Commission-based advisors get paid via the investments you buy. They receive a percentage of your investment funds from the investment provider. Commissions can be sneaky and there is a fine line of fiduciary duty here, so dig deeper into these questions if you decide to work with this type of professional.

Fee-based advisors are paid with a commission and fee combination. 

A fee-based advisor is paid a fee based on the amount of assets they manage, and a commission based on other investments or insurance products they sell. This is a crucial distinction. A fee-based advisor charges an AUM fee which is separate from any other commission. 

This means that firms can be dually registered as broker-dealers and fiduciaries and can take their fiduciary hat on and off to sell you financial products on commission. Or, it simply can mean that an advisor is also life and health insurance licensed and can offer you insurance products to best suit your needs and your financial goals, which then the insurance company would pay the advisor the commission. Your best bet is to always ask how your advisor is being compensated and be sure you are comfortable with their answer.

When planning your financial future, you need to be asking the right questions. Know what you are looking for to establish your needs so that together, you can create the ideal plan. At SGL Financial, we are proactive in our approach to preventing issues while continually refining our methods to ensure the best possible service for you.