What does a Financial Planner do?

Navigating personal finance can be complex and daunting, often influencing major life decisions. Financial planners and advisors offer a structured approach to help you achieve your financial goals, whether it's buying a home or planning for retirement.


Personal finance can be intricate, overwhelming, and delicate because finances are the driving force behind many decisions we make whether it’s where you’re going to live, how many kids you’ll have, or what job you should look for.

These huge life decisions leave many people puzzled about where to start, but that’s where financial planning can help. Financial planners and financial advisors are professionals who can help you make a financial plan, but what do they actually do, and how can they assist you in achieving your financial goals or deciding how many kids you can afford to have.

By the end of this article, you will be able to confidently understand what financial planning is, and who financial planners and advisors are.

Definition of a Financial Planner

A Financial planner is a professional who assists individuals in managing their finances to achieve their life goals. They follow a step-by-step method to collect important financial details from clients. First, getting an overview of their current financial situation, and then creating a personalized plan to achieve the clients' goals. It starts with a conversation to understand the clients' goals and current financial status. After making a plan, the financial planner helps put it into action, like opening new savings accounts, making spending plans, talking to legal experts about estate plans, or tweaking insurance plans.

Once a financial planner delivers a plan to their client, they will monitor and update the plan as the clients’ life changes. Remember, a financial plan delivered by a financial planner must be updated often!

Financial planners often focus on helping certain groups like retirees, young families, tech workers, or business owners. Working with a financial planner is usually a long journey, where they give advice on many money matters like budgeting, handling debt, investing, insurances, planning for retirement, sorting out estates, and tax planning.

When picking a financial planner, it's key to find one you get along with, who makes you feel comfortable, and talks to you like a human being. They might charge by the hour, a one-time fee, or a fee based on the total money they manage for you, covering ongoing chats and plan updates.

In short, a financial planner is your go-to person for making sense of personal finance, offering the know-how and help you need to make smart decisions and move towards a secure financial future and achieving your life dreams.

Financial Planner vs Financial Advisor

The terms "financial planner" and "financial advisor" are often used interchangeably, but there can be a slight difference between the two. Typically, financial planners and financial advisors will use either title. However, if a financial advisor works on a team with other professionals, they may have a dedicated financial planner who focuses on helping clients develop financial plans by aggregating all the data necessary to create the plan.

Unfortunately this leads to many people being confused, but the bottom line you need to know is that financial planners and financial advisors can help you create, implement, and update your financial plan. In this article, we’ll primarily use the term "financial planner".

What Does a Financial Planner Do?

Consultation and Data Gathering

  • Initial Meeting: The first step usually involves a consultation to discuss your goals, financial situation, and any concerns you may have.

Financial Analysis and Plan Development

  • Comprehensive Review: The financial planner assesses your current financial status, such as income, expenses, assets, and liabilities.
  • Plan Creation: Based on the analysis, a customized plan is developed to help you achieve your financial objectives.

Plan Implementation and Monitoring

  • Taking Action: Once the plan is finalized, the financial planner will help you implement it. This could involve opening new investment accounts, setting budgets, meeting with estate attorneys, or adjusting insurance coverages.
  • Ongoing Review: Financial planners often provide ongoing services to track the performance of the plan and make necessary adjustments.

Quick Fact: ~40% of Americans have never had a budget, underscoring the importance of financial planning.

Specializations within Financial Planning

While the specializations of financial planning can differ greatly from advisor to advisor or planner to planner, the most common specializations come in the form of the kind of clients these professionals work with.

Some planners focus on clients in a particular life stage like retirement, so they can provide an “artistic” touch to their clients plans based on prior experience.

Here are some of the common specializations:

  • Retirees
  • Young families
  • Tech employees
  • Business owners

 How to Choose a Financial Planner

Choosing the right financial planner is crucial for long-term success. In this situation, the “right” financial planner means a few things, but we’ll focus on the personal reasons first.

1. You won’t be willing to take advice or be open with someone you don’t connect with. That’s why it’s important to choose a planner or advisor who you get along with!

2. Choosing a financial planner who really understands your unique situation and lived experiences is worth consideration. Not only will you be able to bond over something like having divorced parents, but the planner can draw from their own experiences to provide the best possible advice to you.

Now you understand the importance of choosing a planner who you enjoy being with, let’s talk about some of the other things you should look out for when choosing a planner.

1. Interview Multiple Planners: Prepare a list of questions and schedule consultations with at least 2-3 potential planners. Here are 10 crucial questions to ask your advisor before hiring them!

2. Ask About Their Approach to Financial Planning: Some planners are more conservative, while others take a more aggressive approach. Make sure their philosophy aligns with your risk tolerance.

3. Check for Any Disciplinary Actions or Complaints: Regulatory websites and organizations often provide information about any disciplinary actions or consumer complaints against financial professionals.

4. Evaluate Communication: How often will the planner communicate with you, and what methods will they use? Make sure their style matches your expectations.

5. Take Your Time: Don't rush into making a decision. Take the time to evaluate each candidate thoroughly before committing.

What to Expect in a Financial Planning Session

During a financial planning session, the financial planner or financial advisor will typically ask you about your financial situation, your financial goals, and your risk tolerance. They’ll ask you to come with documents like bank statements, life insurance policies, estate plans, credit card statements, mortgage or debt statements, and other financial documents needed. 

You should expect them to ask very detailed questions about you and your family.

Once they gather information, they will then work with you to develop a financial plan. Once the plan is delivered to you, you and planner or advisors will review it together and make any necessary changes.

The financial plan may include a budget, a debt repayment plan, an investment plan, and an insurance plan. The financial planner may also provide you with advice on other financial topics, such as estate planning and tax planning.

Once you agree to the plan, you and the planner will begin to actually implement it. The implementation of a plan is not a scary task - it’s typically adjusting investments in your portfolio, filling any insurance gaps, and making sure your estate plan is up-to-date.

How Financial Planners Charge for Their Services

Financial planners can charge for their services in a variety of ways:

  1. Hourly fees: you’ll pay the planner based on the number of hours the financial planning process took.
  2. AUM fee only: you’ll pay an AUM fee for the ongoing relationship with your planner or advisor, which includes the planning process and any updates to it.
  3. Flat fee: some financial planners charge a flat fee or one-time fee for a financial plan, which can be fine if you don’t expect changes in your life. However, each time the plan needs updating, you’ll pay the one-time fee.

It is important to understand how the financial planner charges for their services before you engage their services. This will help you avoid any surprises down the road.

Financial planners and financial advisors can play an important role in helping people achieve their financial goals. They can provide guidance and support on a variety of financial topics. If you are considering working with a financial planner, be sure to do your research and choose a planner who is qualified and experienced for what you are looking, not anyone else.


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