WONDERING WHAT THE DIFFERENCES ARE BETWEEN A COMPREHENSIVE FINANCIAL PLANNER AND A FINANCIAL ADVISOR?
We were, too. We consulted with Jonathan Brant and Jim Eaton of Prudential Advisors in Monrovia to find out the difference and answer some other questions. Jonathan was happy to meet with us and help clear up our confusion.
1) I DON’T UNDERSTAND THE DIFFERENCE BETWEEN A PLANNER AND AN ADVISOR OR WHICH ONE I NEED BASED ON MY GOALS. CAN YOU EXPLAIN?
These are both simply titles. Yes, it can be confusing since both financial advisors and financial planners can do comprehensive financial planning. To us, a financial advisor is typically someone whose primary focus is on growing wealth through investment growth. We believe for most people, the financial planning process is the starting point because we have to get to know your actual goals first and your current situation before determining how much of your money should be invested, for what purposes and what amount of risk should be taken. With those goals in mind, we also help to improve your cash flow, manage liabilities, find ways to structure and manage your investments and tax and estate planning strategies so you are active in everything you do financially. No matter the title, before you enter a relationship with a planner or advisor, it’s imperative that you and the planner/advisor know what services are provided.
2) IT SEEMS LIKE THERE’S A LOT OF FINANCIAL ADVICE AVAILABLE FOR FREE ONLINE. WHY PAY FOR A PLANNER WHEN I HAVE ACCESS TO FREE RESOURCES?
Excellent question, and yes, it’s true—free information is abundant. People have busy lives with work, family and hobbies so finding time to do your own detailed and comprehensive planning could be challenging. We focus on connecting you financially with the economy and markets. You need to decide if it is worth paying a professional to take it off your plate. In the ever-changing world of finance, it is essential to resource the people who are experts. There are many regulations and changes to keep up with, such as what’s going on in the actual economy and markets, tax law changes and regulations, estate planning changes, etc. It is best to seek out a knowledgeable professional since this is our passion and our arena. We keep our finger on the pulse of your financials so you can fully focus on your family, business or whatever you enjoy most in life.
3) MANAGING MONEY CAN BE OVERWHELMING. I DON’T HAVE MUCH CONFIDENCE THAT I’M SAVING THE RIGHT WAY OR PREPARING FINANCIALLY FOR ANY CATASTROPHIC LIFE EVENT. ARE YOU ABLE TO HELP ME NAVIGATE THOSE KINDS OF STRESSORS?
We can help you develop a plan so that you can have confidence that you are moving in the right direction. The first step in managing your money and developing a successful plan is fully understanding your current situation and cash flow. Identify your cash flow, which is what remains of your income after paying expenses and taxes. Prioritize the plan’s goals, which would typically be to protect your assets with the proper insurances and develop an emergency fund with around six months of living expenses saved away and ready if needed. Knowing that you are prepared can help to alleviate the stress associated with unexpected financial situations. After that, begin earmarking funds to invest in building wealth through other investment goals such as college education planning, an annual vacation/travel budget, retirement, second home, etc.
4) I UNDERSTAND THAT PLANNING FOR RETIREMENT IS CRITICAL, NO MATTER HOW YOUNG OR FAR ALONG YOU ARE IN LIFE. CAN YOU STILL HELP SOMEONE PLAN WELL EVEN IF THEY ARE ALREADY AT RETIREMENT AGE?
Retirement planning is critical. Start preparing earlier because you will give yourself a longer timeframe to work within. Compounding interest (investment returns over time) is a powerful factor in retirement planning. For those who are late to the game, better late than never, and it’s essential to begin as soon as possible. It will require a more significant financial sacrifice to build up a nest egg to live on, but it is not impossible. Have a financial plan before retiring and work with a professional to help determine what that nest egg needs to look like in light of your other assets and Social Security benefits. It’s critical to know how to distribute your nest egg most efficiently to successfully fill the income gap, year in and year out, during the retirement years. Also, we live much longer than previous generations, and the economic landscape is widely different. Hence, you have to plan differently for retirement.
5) I HAVE MANY QUESTIONS NOW AND WILL PROBABLY HAVE A LOT MORE ALONG THE WAY. CAN I REACH OUT WHEN THEY COME UP?
Yes, we always encourage our clients’ questions because it means they are implementing their financial plan. We want our clients to stay active with all aspects of their plan because their chances of success significantly increase if that is the case.
6) I HAVE SOME BIG DREAMS AND GOALS, BUT MOST OF THEM SEEM OUT OF REACH FINANCIALLY. IF I WALK YOU THROUGH THEM, CAN YOU GUIDE ME ON MAKING THOSE DREAMS A REALITY OVER TIME, OR IS THAT WISHFUL THINKING?
That’s what the financial planning process is all about—setting goals and figuring out your “real” current situation. We start at the same point together and grow toward those goals, with the plan serving as a roadmap. You won’t get there overnight, so as with most goals, it will take time and consistency. The more you make your financial plan part of your routine, the more knowledgeable you become about where you stand financially. As a result, you will gain greater confidence moving towards your goals.
Jonathan Brant and Jim Eaton
Jonathan Brant and Jim Eaton are financial planners with Prudential Advisors in Monrovia. Jonathan and Jim say, “If you have ever thought about working with a financial planner, we encourage you to explore it further. Many in our profession are looking to put their clients first and build long-term relationships. Find someone you can trust, is knowledgeable and with whom you can see yourself growing with and working alongside.”
Prudential.com/Advisor/Jonathan-Brant