Should young people see a financial planner?

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I found an interesting article in US News. The value of a financial planner to a young person depends upon how someone defines a young person and what kinds of services that financial planner is commissioned to provide.

If young person means someone under age 18, it is uncommon that a financial planner is needed to coordinate a large investment portfolio. However, a financial planner would still be very useful to provide financial education. Unfortunately, too many financial professionals are salespeople rather than trusted educators. Regardless of age, I would recommend finding someone who sees his or her primary role is that of educator. In that vein, seeking a fee-only financial planner is a good idea for people of all ages, provided you find yourself learning during your visits.

One good rule of thumb for any financial transaction pertains to who is paying this person. If one operates on commission, the company one sells for is paying the person and, therefore, the seller owes his or her allegiance to the company and not to you. However, if you are paying the person, there is a better chance that the advisor is keeping your best interests in mind.

I love financial planners. I provide financial counseling to many folks and I find it very rewarding to help some people discover better ways to manage their affairs. The most important thing to keep in mind is make sure they are working for you.

Here are a few warning signs to look out for:

1) The advisor wants to sell you something the first time you meet.
2) The advisor hasn’t asked you a bunch of questions to understand your situation.
3) The advisor seems to push you in the direction of one financial product.
4) The advisor starts marketing you investments before you’ve discussed your cash flow situation.

Remember that 80% of the game of personal finance has to do with cash flow management. Any advisor that isn’t addressing this is thinking more about selling you something rather than helping you solve your financial problems.

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