Can You Afford Not To Have a Financial Plan
Who can’t use a roadmap nowadays? Economic times certainly causes many people to think about getting a financial plan done to help get back to where they were before the Great Recession that started in 2007.
The Great Recession
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It was triggered by reduced interest rates, followed by easy credit, sub-prime lending, increased debt burden, incorrect pricing of risk, and finally a liquidity shortfall in the United States banking system. This resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, and a significant decline in economic activity, leading to the Great Global Economic Recession In 2008.
Advisors and Planners
A financial planner helps clients create formal plans to manage their money over the long term to reach their goals (such as retirement or sending children to college), including the flexibility to handle financial emergencies. Financial advisers are also called investment advisers. The Security and Exchange Commission provides overviews of
Financial Planners and
Investment Advisers.
Can They Save The National Economy?
To be sure, Financial Plans are considered a wise investment for households, but can they save the national economy? A recent survey commissioned by the Certified Financial Planner Board of Standards suggests maybe... The poll which consists of more than 1,000 adults age 18 and up found that those with a financial plan possessed greater confidence in their financial well-being and were more likely to spend money in a recession than those who lacked a plan. For example, 59 percent of those polled who had plans were willing to make home improvements, compared to 33 percent of those who were lacking plans; 49 percent of people with plans said they would splurge on personal items, while only 25 percent of those without plans would splurge.
CFP Chairperson Charles A. Moran said “Those who had their own financial plan, overall, feel more optimistic about their own financial future and are more willing to contribute to the economy by spending more,”
Can You Afford a Planner?
Financial Planners generally charge in one of three ways:
- a fixed or hourly fee for a specific service (called fee-only)
- no fee but with a commission earned on the products bought
- combination of a fee for the planning process and commissions on the products bought.
Hourly rates can cost $100 -$400, depending on location and the planner's qualifications, but average $175 an hour. Fees for services might look like this; A financial consultation for clients in their 20s and early 30s can cost $540 -$900, while a pre-retirement assessment could be $1,080 -$1,800, and a comprehensive financial review might run $1,620 -$3,960.
Hourly charges for sample retirement plan that required seven hours of work may attract $190 an hour, for a total cost of $1,330. Flat fees (rather than hourly rates) are generally based on an average number of hours of work, and start around $400 -$500 for basic financial plans and increase depending on the scope and complexity.
Commissions range from 1 percent or less on money market accounts and treasury bills, up to 5.5 percent on mutual funds (which translates to $500 -$2,375 on a $50,000 investment). Most financial planners will provide a half-hour or hour-long initial interview for free.
Can You Afford Not To
Those with financial plans tend to have more money to spend. The survey mentioned above…found that 91 percent of those who earn at least $100,000 a year have a plan. That number falls to 74 percent for those making between $35,000 and $50,000 annually, and to 69 percent for those earning $35,000 or less.
Do not go it along...
Get Professional Help
Sources:
- CFP: Financial Plans’ Peace of Mind Loosens Purse Strings, Too | Jun 16, 2011 6:38 PM, By Jerry Gleeson |Registered Rep Magazine
- How Much Does a Financial Planner Cost? CostHelper.com | 4020 Moorpark Ave., Suite 210 |San Jose, CA 95117
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Jim Robinson posted on Wednesday, June 22, 2011
Tags: Retirement, Wealth, Underserved, African American, Latino, Hispanic, Minority
Posted in: Site News, Minorities
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