Financial Advice for Real People

Financial planning and investment advice are not reserved for the privileged few. An increasing number of middle-income Americans are seeking sound, timely financial advice that realistically matches their goals and means.

Responsibility for retirement planning, for example, has shifted from employer to employee with the advent of tax-deferred savings plans and self-directed brokerage accounts.

Each person has a different level of financial acumen that helps determine the level of help they need from a financial advisor. Some investors need a financial planner to architect their plan. Others prefer to direct their own investments and use a financial planner to serve as a safety net throughout the planning process.

Investors should understand the difference between financial planning and investment advice. Financial planning is a holistic approach to life planning. Investment advice is simply one piece of that puzzle.

Financial advisors are often connected to companies that offer investment products such as annuities, tax services, mutual funds and life insurance. However, it's important to remember that working with a financial planner does not lock a person into purchasing products offered by the advisor's company.

When creating a financial plan, investors should consider:

1. Risk management - Possibly the most crucial element of a financial plan. A financial planner can help determine insurance needs for disability, long-term care and casualty.
   
   
2. Investment planning - A financial planner can help determine funding strategies for specific goals and asset allocation strategies inside or outside of employer-sponsored, tax-deferred savings plans.
   
   
3. Education funding - Most parents will face meeting the challenge of rising education costs. A financial planner can outline and analyze whether tools like 529 plans make sense for an individual or family.
   
   
4. Retirement planning - Work with a financial planner to set retirement goals and chart a plan to meet them.
   
   
5. Estate planning - Uncle Sam plays a big role in determining the level of inheritance that actually reaches its intended target. Financial planners can provide advice about estate tax planning and charitable giving prior to an individual meeting with an attorney.

Make sure the financial advisor is willing to take the time to know your goals and dreams. Ask around for feedback on the advisor, request referrals from potential financial advisors, and talk to their current clients.