Yet, your neighbor or your sister or your boss has enthusiastically had a financial planner for years and by your estimation is doing quite well financially.

What is with this disconnect?

The Three Big Overlooked Reasons Financial Planners Get Hired 

If hiring a financial professional is a “waste of money,” why in the heck would wealthy people never live without one? 

Quite simply, wealthy people (millionaires and beyond) use financial professionals for three primary and related reasons.  

#1:  Time optimization.  They don’t want to spend their free time mastering asset management, tax management, risk management, long-term (retirement) planning, wealth transfer to their kin, and debt management.  

Rather, they want to spend their time doing what they’re good at that makes them lots of money.   And they want to spend their free time with people they love and pursuing personal passions.

#2:  Keeping up with the learning curve.  They want “short cuts.”  They want to delegate and defer to experts so that they can make money and build wealth faster and more efficiently and often in ways they never anticipated. 

Laws change all the time.  New strategies emerge.  Wealthy people want others to keep up with changes and help them cut through the noise and implement what makes sense for them and quickly.

#3:  The more the merrier.  Perhaps most importantly, they enjoy the collaboration.  Making money is fun.  Being able to hold onto money is fun. Doing good in the world with that money is fun.  Raising the next generation with good money skills is fun.  And all of this is way more fun when you have someone to do it with that is not just your business or personal partners.  

A Good Analogy: Financial Planners Are Akin to Personal Trainers

You don’t need a financial planner any more than you need a personal trainer at the gym.  

You can go to the gym to get stronger, improve your performance, be healthier, create community.  You can build a gym at home.  You can get exercise routines off the internet.  You don’t need a personal trainer for any of that.  You can do just fine on your own.  So the story goes.

But it can get lonely.  Motivation wanes. Consistency falters. Creativity lags. Confidence fails.  There’s that nagging tendonitis.  Having a personal trainer improves this situation.  

Hiring a financial planner is like hiring a personal trainer—while you can achieve your goals on your own, having an expert by your side significantly increases your chances of success and reduces the risk of financial “injuries”  

It’s also more fun to have a partner in the process.  It’s less lonely.  It’s more energizing.  It’s typically more successful overall.  

The Personal Trainer of Finance

“Self-made” millionaires – those who have typically built wealth through years of hard work and smart investments – typically hit milestones or plateaus in their lives. They want to buy or start new businesses, want to take a sabbatical, they want to get married or divorced, their kids are struggling need extra time and attention, their parents need extra time and attention, they want to retire and scale back at work, they have health challenges, laws change and they need to pivot on a previous plan.  This list goes on.

Despite their success, the complexities of managing money and wealth start to feel overwhelming. Taxes, investment strategies, and planning for future generations all present significant challenges. 

This is where a financial planner steps in.

Just like a personal trainer can improve your fitness routine, a financial planner optimizes your financial health. While you could handle your finances on your own, having an expert by your side increases your chances of success and reduces the risk of costly mistakes.

But Aren’t They Losing Money?

More often than not, no.  

Two main reasons:

#1. Failing to plan is planning to fail.  As cliche as this is, folks who plan for their wealth make better decisions sooner that optimize their assets early on and that leads to better outcomes.  They make fewer mistakes along the way. 

#2. Reducing downside.  They typically save money in taxes and they typically have investments that are allocated to protect them against market downturns.  Managing capital gains taxes alone can improve a portfolio’s return such that it exceeds the cost of the planner.  And not losing money is as important as making it.

And, again, they have a partner.  They enjoy the collaboration.  The energy of that partnership alone improves their financial outlook.  They don’t waste time spinning their wheels on the internet, trying to figure out how a particular strategy applies to them.  Those with financial planners are already implementing.  

The Confidence of Professional Guidance

For millionaires, managing finances is an ongoing journey that doesn’t end with achieving financial success; it’s just the beginning. Making informed decisions to maximize financial strategies and investments is essential. 

Whether you’re considering covering additional educational expenses, transferring funds to a sibling, debating on when to take Social Security, or exploring options like converting IRA money into a Roth IRA, each step requires a strategic approach to optimize outcomes. 

Experienced financial planners can help millionaires navigate the complexities of managing their finances, providing personalized advice tailored to their unique needs. This reassures you that every dollar works hard for your future.

If you want to talk about how Lanning Financial might be able to help you, please reach out.

Find out what services are really being offered

One of the bigger issues in the financial services world these days is whether someone who handles money for another or gives or sells advice to another or sells someone a financial product should be held to a fiduciary standard.  There are different licenses to hold, different regulatory bodies, different ways of doing business, and the list goes on.  This is what makes it so hard for the government to provide uniform regulation (not to mention the power of the lobbyists) and hard for consumers to find their way.

In the mortgage business, clients learned to ask, “What is it that you do, how do you do it, and how do you make your money?”  We answer their questions. The same is true in the financial services business.  Clients need to learn to ask, “What is it that you do, how do you do it, and how do you make your money?”

Because a money manager often just manages money.  By that, I mean, this person takes a lump sum of money and keeps an eye on it and makes sure that it’s invested within the confines of the client’s needs and goals.  But that person doesn’t necessary explore what the client’s needs and goals are. That might be a different person.  A money manager often will also not provide a comprehensive look at a client’s overall financial situation and make recommendations outside managing money—for instance, the advice to get one’s estate plan done.

A wealth manager sometimes just calls him or herself that because it’s a fancy way of saying that he or she only takes clients of a certain net worth.  This person might only specialize in managing money, but often has a group of advisors that do tax and legal strategies for the client in concert with the money management services.  Yet, young people who are on their way to being wealthy may require very similar services.

By the way, everyone it seems calls him or herself a financial planner—whether they are securities licensed with no CFP® designation or are simply licensed to sell insurance.  It’s a widely abused term, just as “mortgage broker” was a few years ago until the regulatory agencies said a licensee could not use that term unless he or she actually had a broker’s license.  The same will happen with the term financial planner.  Someday.

In the meantime, get into the habit:  What is it that you do?  How do you do it?  How do you make your money?