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Checking up on Financial Planners
By JLP | January 26, 2006
Michelle Singletary offers up some advice on working with financial planners in her latest The Color of Money column. I think most financial planners would agree that it is important for their clients to understand the basics of personal finance. Otherwise, they are wasting their time and your time because most likely you will not stick with the program.
Think about it. If a person doesn’t understand the law of compounding or the time value of money, there’s a pretty good chance that they will make short-term decisions at the expense of long-term goals.
For instance, I had a cousin who had $30,000 in her Wal Mart 401(k). She withdrew all $30,000 to buy a Ford Thunderbird. Of course, she lost half of her money due to taxes and penalties. Oh, and she lost another $3,000 or so as soon as she drove her shiny new Thunderbird off the lot. Dumb decision. Very dumb decision. Most likely she didn’t think through her decision. Most likely, she will be one of those who are most vocal about how small her Social Security check is when she retires.
That’s why we need to spread the word about personal finance. The more people we can educate, the better off we will be.
Topics: Financial Planning | 4 Comments »
January 26th, 2006 at 12:09 pm
In a sense you are right, but I honestly think most people who seek financial planners do so BECAUSE they don’t know the basics of personal finance and need that level of guidance. Of course there are those that have the basics down and look to planners to help get them to the “next level” but I wonder what percentage of clients each type amounts to.
January 26th, 2006 at 12:13 pm
It seems like there ought to be a position for people to teach others the VERY basics of personal
finance. We’re talking VERY basics, like setting up automatic payments and budgeting. It seems
like these are skills that most or all people should already have, but my husband, who recently
began working in an adjustments department, says it’s phenomonal how little people know and
understand about handling their money.
Plus, it would be a fun job for those of us who are money-savvy, but don’t want to become
financial planners. *Grin*
January 26th, 2006 at 12:14 pm
P.S. Sorry my comments are messed up, but for some reason your comment screen
goes screwy when I start typing. I didn’t mean to write a bizarre looking post.
January 27th, 2006 at 2:38 pm
I’ve never sought the advice of a financial planner myself. But shouldn’t part of their job be to educate their clients, no matter what their knowledge level when they walk in the door? Just a thought.