There's Financial Planning and Then There's REAL Financial Planning

When it comes to managing your finances and planning for your future, seeking the right advice is crucial. Many individuals turn to financial planners provided by broker-dealers or insurance companies, assuming they will receive comprehensive guidance. However, it's essential to understand the limitations of such services and explore an alternative option: real financial planning. Real financial planning offers a holistic, comprehensive, and unbiased approach, tailored to your unique needs and long-term financial goals.

Real financial planning typically offers a comprehensive range of services that address various aspects of personal finance, such as investment planning, retirement planning, tax planning, estate planning, and risk management. It takes a holistic approach to consider all relevant factors in creating a personalized financial plan.

In contrast, financial planning provided by insurance companies often focuses primarily on insurance products. Their planning services may revolve around selling insurance policies, with an emphasis on products like life insurance, health insurance, annuities, or other insurance-based investment vehicles. While insurance is an important component of financial planning, it is not the sole focus of a comprehensive plan.

Likewise, financial planning provided by broker-dealers often focuses on investments. They typically offer guidance on asset allocation, investment selection, and portfolio management. While they may touch on other financial planning aspects, their expertise may be more concentrated on investment-related matters.

Real financial planners are typically independent professionals who offer unbiased advice. They are not tied to specific products or companies, allowing them to evaluate various financial products and providers objectively. Their recommendations are based on a client's unique needs and goals.

On the other hand, financial planning services offered by insurance companies may have a vested interest in promoting their own insurance products. While they may provide valuable insights, their recommendations might be influenced by the goal of selling their company's insurance offerings, which they will surely be paid higher for selling versus other options.

Broker-dealers often have proprietary products or preferred product partners. They may have incentives to promote or sell specific investment products or services affiliated with their firm. While they may provide valuable advice, their recommendations might be influenced by their affiliations or potential financial incentives tied to product sales. Their planning services may revolve around selling specific investment products that, although they may have lower performance and higher fees than comparable investment products, they will still have you invest in because they are paid higher commissions to sell those specific products. Those investments may be suitable for you, but they may not be the best investments for you.

Real financial planners often possess expertise in multiple areas of finance, such as investments, taxes, estate planning, and more. They may hold certifications like Certified Financial Planner (CFP), and may specialize in one or more areas or niches of particular types of clients. The broad knowledge of a financial planner providing real financial planning enables them to provide comprehensive advice across various aspects of personal finance.

In comparison, financial planning services provided by insurance companies and broker-dealers tend to focus primarily on insurance-related matters or investments. Their expertise may be more limited to their insurance products and the associated benefits they offer, or on specific investment products. While they may have knowledge in certain insurance-related or investment-related areas, they may not provide as comprehensive guidance on other financial aspects.

Real financial planners typically charge a fee for their services, which can be based on an hourly rate, a percentage of assets under management, or a flat fee. This fee structure, known as fee-only, provides transparency and ensures that the planner's compensation is not solely dependent on product sales. For more about fee-only financial planning, read the previous Escient Financial Insights article What is a Fiduciary and Fee-Only Financial Planner?

Insurance companies and broker-dealers commonly earn revenue through a combination of fees and commissions. They may charge a percentage-based fee for managing investments or provide commission-based services where they earn a commission on the sale of insurance or investment products. This mixed fee and commission structure can create potential conflicts of interest, as their compensation is influenced by and tied to the sale of specific products.

Choosing real financial planning over other options can offer several advantages. Here are some reasons why someone might opt for real financial planning:

Real financial planning takes a broader perspective, encompassing crucial aspects like investment planning, retirement planning, tax planning, estate planning, risk management, and more. By opting for real financial planning, you'll benefit from a comprehensive roadmap that addresses all areas of your financial life, ensuring no stone is left unturned, and tailored to your specific goals and circumstances.

Real financial planners operate independently, free from ties to specific financial products or institutions. They have the flexibility to evaluate a wide range of financial products and providers objectively. Their advice is unbiased and focused solely on your best interests, as they are not driven by sales targets, commissions, or hidden agendas.

Every individual's financial situation is unique, and cookie-cutter solutions may not address your specific needs. Real financial planning emphasizes personalized solutions. With a real financial planner, you'll experience a collaborative process where your financial planner takes the time to understand your unique financial situation, goals, risk tolerance, and time horizon. This allows them to develop a customized plan the aligns with your specific needs, helping you make informed decisions and providing you with a roadmap that is aligned with your aspirations and supports your long-term success.

               Real financial planners often operate under a fiduciary duty, which means they are legally obligated to act in your best interests. This duty ensures that your financial planner's guidance is trustworthy, ethical, and solely aimed at your financial well-being, where they prioritize your needs above their own, providing trustworthy and ethical guidance. Choosing a real financial planner who upholds a fiduciary standard gives you peace of mind, knowing that their recommendations are driven by what's best for you, rather than external influences. For more about fiduciary financial advice, read the previous Escient Financial Insights article What is Fiduciary Investment Advice and Why Does It Matter (Now More Than Ever)?

Real financial planning is an ongoing process that requires regular monitoring and adjustments. Real financial planners regularly review and monitor your financial plan, making necessary adjustments to keep it aligned with your changing circumstances, goals, and market conditions. Their ongoing guidance and support helps you stay on track and navigate any financial challenges that may arise to overcome financial challenges and stay focused on achieving your objectives.

Real financial planners aim to educate and empower you to make informed financial decisions. They explain complex financial concepts, help you understand your options, and provide clarity on the implications of different choices. This knowledge empowers you to take an active role in managing your finances and work towards your goals with confidence.

Real financial planning often involves building a long-term relationship with your financial planner. They get to know you and your financial situation intimately over time, which allows for better understanding, trust, and collaboration. This long-term relationship can provide stability and continuity in managing your financial affairs.

While other options such as financial planning provided by insurance companies or broker-dealers may offer valuable insights in specific areas, real financial planning provides a more comprehensive and personalized approach, independent advice, and a fiduciary duty. These factors contribute to a client-centric experience that is focused on your best interests and long-term financial success.

Choosing a financial planner is a significant decision that can have a lasting impact on your financial future. While financial planners at broker-dealers or insurance companies have their merits, they often come with limitations such as a narrow focus, conflicts of interest, and potential biases. By embracing real financial planning, you open the door to comprehensive, unbiased, and personalized guidance that aligns with your specific needs and aspirations. Take control of your financial future and consider working with a real financial planner who operates independently, upholds fiduciary standards, and offers a holistic approach to help you achieve your long-term financial goals.

If you're looking for real financial planning, you've come to the right place, as that's exactly what Escient Financial provides. To find out more, feel free to...