When I was a new attorney, I met a financial planner at a party. He was telling me about Self Employed Pensions (SEP) and how I really should start one. I remember thinking to myself , “buddy, I’m more worried about paying off my student loans then having you sell me a SEP.” How I wish I had not been so cynical and narrow minded. Alas, my attitude continued.
It took years, but I finally paid off those loans, and started earning enough to put some money into savings. A friend of mine was a day trader, and he was kind enough to give me some leads on investment opportunities. I set up an Ameritrade account and figured “hey, I’m an attorney, it’ll be easy to become a savvy investor.” Over the years, some investments have paid off, but most have not. I reached the point of rarely looking at my Ameritrade account, and sometimes even forgetting I had one. Since those attempts, I decided to just go with IRA’s and mutual funds. There was no planning involved other than to put some money into each every month. However, I found myself slowly forgetting to put the money away. It became every other month, then every quarter, and finally just whenever I thought of it. Not the best way to save for your retirement.
About seven years into my practice my office was doing well. I hired a high-price downtown CPA to work on my taxes. There’s a rumor that all the rich people have CPA’s and therefore they don’t pay anything in taxes. I met with the CPA with this thought in mind and told him that I would really like to pay less in taxes. You may be wondering what his brilliant, high-priced advice was…Here it is: “if you want to pay less in taxes, then earn less money.” Seriously, that was his straight faced advice.
There are many other things the CPA could have advised me to do. The easiest would have been to incorporate my office. However, I had to discover that on my own. This experience cemented in my mind that “paying others for economic advice is a waste of money. I can do it on my own…I’m a lawyer.” What I should have learned was that I needed to look for the right person.
Instead, I went looking for the easy way. I went to a financial planner based solely on the recommendation of a friend. I didn’t shop around or ask for more opinions. I went to the one referred by friend. I confirmed with the planner that his fees were hourly based. I also asked if he was getting paid by the mutual fund he was recommending. His response was “yes.” My gut told me to run, but my head said “well, he comes so highly recommended; I’ll give it a shot.” It turned out to be the worst investment I ever made.
It was a couple of years ago that I started to worry about retirement. I had a healthy savings account that received minimal interest. My mutual funds and IRA’s rarely lost money. However, whenever I read an article on how much money I would need to retire, my palms began to sweat. I interviewed a number of financial planners and finally found one that was generally interested in my desires, was not double dealing, and who had the knowledge to help me out. I turned over every account to him. I no longer have to reconcile all my different investments. I now have a plan to take me where I want to go. I no longer worry (as much) about how I’ll survive when I retire. It was the best decision I ever made…I just wish I had made it much, much earlier.
So, the answer to the question is yes, you need a financial planner. The reason for a Financial Planner is to help you map out where you want to go, and how you will get there. Much like when you hire a lawyer-coach.