Busted: “Only the wealthy need financial advisors.”

What’s one piece of financial advice that applies to everyone — young and old, rich and poor? Work with a professional.

Unfortunately, a lot of people think only the wealthy need professional financial advice. Let’s bust that myth once and for all.

In reality, it couldn’t be further from the truth. In fact, I would say that the less money you have, the more important it is to get good financial advice. After all, you have a lot less room for error.

Financial guidance is especially critical when planning for retirement. Retirement planning can be complicated, and qualified financial professionals have the knowledge, tools, and resources to help you make smart decisions.

Speaking of qualified financial professionals, let’s be clear on that point. Just because your brother-in-law, your buddy, or your neighbor knows a thing or two about money doesn’t mean you should follow their advice. You need someone who has the right training and experience.

Asking these initial questions of prospective financial professionals should get you most of the information you’ll need to make a good choice:

  • How long have you worked as a financial professional? In general, the longer someone has been in the business, the more insights they may have on what works and what doesn’t.
  • What are your credentials? Financial professionals should have the appropriate insurance licenses and securities registrations. Beyond that, there are several professional designations they could have. Examples include Chartered Life Underwriter (CLU®), Certified Financial PlannerTM (CFP®), or Chartered Financial Consultant (ChFC®).
  • What kinds of financial products do you have access to? It’s important to have access to a broad range of products, because you’ll likely have different financial needs during your life — saving for retirement, saving for college, life and disability insurance, and so on.
  • What’s your process? Financial professionals who have a very brief, narrow process for creating a financial strategy may just be trying to sell you a product. You need someone who will take the time to look at your whole financial picture and create a comprehensive strategy for the future.
  • What are your fees? Make sure you understand how he or she is compensated for the value brought to the process.

Finding a financial professional you trust can help put you on the right track toward your financial goals. So if you think you’re not rich enough for a financial professional, think again.

Thanks for sticking with us through this blog series. See our previous Mythbusters posts on:

Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc.