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Understanding Financial Planning: A Guide by O1ne Mortgage

Mapping out your financial future can be a daunting task. Between saving for retirement and working toward other financial goals, professional guidance might be just what you need. This is where a financial planner comes in. They can help you navigate life changes that could disrupt your finances and create a personalized plan for your future. While hiring a financial planner isn’t mandatory, it can be a valuable resource to consider.

What Is a Financial Planner?

A financial planner is a type of financial advisor who specializes in providing personalized guidance to help individuals meet their short- and long-term financial goals. Certified Financial Planners (CFPs) adhere to the standards of the CFP Board and participate in mandatory continuing education. They have a fiduciary duty to prioritize their clients’ best interests. A CFP can assist with:

• Budgeting and debt management
• Financial goal planning
• Investment planning
• Retirement saving and income planning
• Tax and estate planning
• Risk management and insurance planning

Pros and Cons of Hiring a Financial Planner

Pros

• They make financial planning less intimidating by creating a personalized plan based on your financial health and goals.
• They specialize in complex financial matters, providing expertise in areas like investing and tax planning.
• They hold you accountable to your financial goals by breaking them down into manageable steps.

Cons

• Fee structures can vary widely, including percentage-based fees, hourly rates, fixed rates, or retainers.
• Not all financial planners are fiduciaries, which means some may have conflicts of interest.

Do I Need a Financial Planner?

Here are some scenarios where working with a financial planner might be beneficial:

• Experiencing life changes that affect your finances, such as marriage, divorce, inheritance, or career changes.
• Needing help with managing finances, including budgeting, debt management, and tax planning.
• Thinking about your financial future, such as retirement planning, saving for goals, investing, and estate planning.

How to Choose a Financial Planner

When selecting a financial planner, consider the following:

• Their credentials and experience
• Their fee structure and pricing
• Whether they are a fiduciary
• The services they offer
• Their approach to financial planning
• Their availability
• Whether they understand your financial status and goals

Alternatives to Traditional Financial Planning

If you’re not ready to invest in a financial planner, consider these alternatives:

• Robo-advisors: These use algorithms to choose investments based on your age, risk tolerance, income, and goals. They automatically rebalance your portfolio as needed.
• Managed retirement accounts: Some 401(k)s and IRAs, especially target-date funds, are hands-off investment vehicles that automatically rebalance as you approach retirement.

Remember, these alternatives are strictly for investments and won’t help with budgeting, insurance, or debt management.

The Bottom Line

Deciding whether to hire a financial planner depends on your unique needs and budget. While some people enjoy managing their own finances, others prefer professional guidance. If you choose to work with a financial planner, ensure you select an accredited professional who aligns with your needs.

For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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