The pandemic shows that long-term financial security is a necessity, not a luxury
Virojt Changyencham | time | Getty Images
As of mid-September, 26.5 million Americans were receiving some form of unemployment assistance. Many families and individuals have been forced to deal with unforeseen health costs and uncertain education and childcare situations in their communities.
Many Americans face a serious threat of financial insecurity, having lost their jobs or income, or both.
The tragic situation facing many Americans contains an important financial lesson. The Covid-19 pandemic has shown us that long-term financial security is a necessity, not a luxury. And that means competent and ethical financial planning must be a priority.
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When financial markets crashed in March and early April, some financial planners began to see an increase in demand for their advice. An April survey by Nationwide found that one in four Americans surveyed had sought help from a financial adviser for the first time due to the impact of the pandemic. And 64% of advisers surveyed by the CFP Board in April said they believe more Americans will seek professional financial advice in the wake of Covid-19.
With continued economic uncertainty, now is the time to focus on how best to maneuver through the ups, downs, and sometimes sideways paths that today’s changing economy takes on your financial goals.
Planning for a financial future is a dynamic process. Changes in your financial situation or lifestyle adjustments such as a career change, marriage, education costs or buying a house affect your financial situation. When you start thinking about how best to manage your financial future, you can turn to financial professionals to guide you.
There is a misconception that it takes a lot of money to work with an advisor on developing a financial plan. This is simply not the case. There are financial planners with different business models meant to accommodate investors of all wealth levels. However, you must be prepared to do the work to find the best financial professional for you and your situation.
Of course, financial planners are not all the same.
Some work for large financial firms, others for smaller financial firms, and some are independent financial planners. But you need to feel confident and trust your financial planner as competent, ethical, and determined to put your interests above theirs in the process – in other words, that they are acting as a fiduciary.
A fiduciary is a financial planner who is committed to acting in your best interests and listening to your decisions. As part of their certification, Certified Financial Planners agree to act as a fiduciary, and therefore in the best interest of the client, when providing financial advice.
Here are some things to consider when looking to find that good financial advisor.
Find out about the advisor’s credentials, financial planning experience, and how they keep up to date with changes and developments in the financial planning field.
Also, what services do they offer and will they be the only advisors working with you? While some financial advisors work directly with clients and others work with a team, ask who will handle your account and ask if the advisor works with professionals outside of their own practice.
How will you pay for the advisor’s services? You can pay for financial advice in several ways. The fees are based on a percentage of the investable assets that the financial advisor manages for you. Commissions are deducted from the products sold by the adviser. Some advisors charge annual or monthly fees to clients who have no assets to manage.
Ask this question: Do others stand to gain from the financial advice you give me?
Ask the advisor to describe any potential conflicts of interest. For example, advisors who sell insurance policies, securities or mutual funds may have a business relationship with companies that offer these products.
Find out how much the advisor typically charges. The advisor should provide you with an estimate of possible charges based on the services that will be used and the products that will be used to implement your plan.
Ask the counselor if you have ever been publicly disciplined for unethical or illegal actions in their career. Investors can find information on the disciplinary backgrounds of financial advisers through the website of the Financial Sector Regulatory Authority. BrokerCheck website, CFP Board Check tool and the SEC Investment Advisor Public Disclosure data base.
As we continue to manage the economic impact of this pandemic, taking the time to find the right financial planner will help you prepare for all market conditions and move towards your financial goals.