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4 Reasons You Might Need a Financial Advisor

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You’ve got a fantastic job, some money in the bank, and life is great. You don’t need a financial planner, right? Actually, there are many reasons why you should be contacting a financial planner when life is smooth sailing—not when you think you need one to help you handle a financial windfall. 

If you don’t understand exactly what a financial planner can do for you, you’re not alone. Only 28 percent of Americans have met with one or have used an online financial planning tool, according to a survey of 1000 households by the Consumer Federation of America [PDF]. But it pays to enlist the help of a professional. A study by HSBC [PDF] found that those with financial plans have 552 percent more assets than those who don’t.

Still not convinced? Here are a few scenarios in which a financial advisor can help you. 

1. YOU'RE CONSIDERING A BIG CHANGE.

A financial planner can help when you’re anticipating a big life change such as having a first child or getting married, says Kelley Long, a financial planner with Financial Finesse, a provider of workplace financial wellness programs. “A financial planner would not only help you evaluate the effect of the additional costs of childcare and saving for college, but could also share strategies for prioritizing, such as encouraging you to stay on track with your retirement savings before saving for college, then assist you with the best ways to save toward these goals," she says.

For example, the advisor could weigh the pros and cons of staying home versus childcare in terms of financials, and see if you could afford to stay home with your new baby—and see how long you could swing it. 

2. YOU'VE RECEIVED AN INHERITANCE.

The planner would help clarify whether the money should be used to pay down debt, to increase lifestyle expenses such as buying a larger home, or to invest, Long says. If you decide to invest, the planner would help evaluate your risk tolerance and would decide how to invest the money amongst different asset classes, such as U.S. or international stocks. “One great value that planners have with investing is reminding you to stick to your plans when there are market events,” Long says. “It’s easy to panic when we see the value of our accounts drop due to a stock market downturn; a financial planner will talk you off the ledge by reminding you that you are a long-term investor, and the dips are part of the ride.”

3. YOU WANT TO REFINANCE.

When the mortgage rates drop and you have a fixed rate, financial planners will look at your situation and figure out if this is a good time for you to refinance, says Kacie Swartz, a certified financial planner in Austin, Texas. “Possibly even more so than when a person experiences a crisis, people who are doing well need a financial advisor to help them navigate opportunity,” Swartz says. She says she would walk you through the pros and cons of re-financing to figure out the best mortgage situation for your needs.

4. YOU WANT TO TREAT YOURSELF.

Sometimes, people don’t realize that they have enough cash to start going on more vacations, to start having more fun. Bobbie Dow Munroe, a certified financial planner in Havana, Florida, says that once in a while, once he goes over all of a client’s finances, he’s able to tell the client that there’s no reason not to start spending a certain amount on special desires, and that doing so will not affect their financial security. “If you are doing everything you should do to fund your goals, the remaining cash is gravy,” Munroe says. “If finances allow, enjoy life along the way, as no one is guaranteed tomorrow.” 

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California Startup Pays Users to Consume Less Energy
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You may know that turning off the lights when leaving a room or lowering the thermostat before bed are smart habits, but with no way to see their immediate impact, they can be hard to keep. OhmConnect is built around the premise that more people would follow through with these actions if they had a little motivation. As Fast Company reports, the San Francisco-based startup rewards California residents for their green choices with real cash.

The mission of the company is to prevent energy grids from using costly and dirty emergency power plants by encouraging customers to conserve power when demand outweighs supply. During “OhmHours,” users receive a text suggesting energy-saving practices. They can choose to opt out or agree to make an effort to lower their consumption. If their usage in the next hour is lower than the average for their home on that type of day (weekdays are compared to the weekday average; weekends to the weekend average) they receive points which can be redeemed for money. The more people participate on a regular basis, the more points they’re able to earn.

Participants in homes equipped with smart devices like a Nest thermostat or Belkin smart switches can program them to automatically consume less during those times. Nearly a fifth of the user base chooses some type of automatic response.

Someone living in a small apartment participating once a week has the potential to make $40 to $50 a year, while a family living in a larger home can earn up to $200. The California energy grid has also reaped the benefits: Since launching in 2014, OhmConnect has saved the state a total of 100 megawatts (the equivalent of not running two emergency power plants at high-demand times). California residents who get their energy through Pacific Gas and Electric, Southern California Edison, or San Diego Gas & Electric can sign up to participate online. If you don’t live in the state but are interested in the service, you may get a chance to try it out soon: OhmConnect plans to expand to Texas, Toronto, and potentially the East Coast.

[h/t Fast Company]

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11 Secrets of Financial Planners
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You share your darkest money secrets with your financial planner. You even tell him about the time you spent your last pennies at Starbucks, because without caffeine, how could you work? This is the person who is supposed to sort out your life so that you can buy everything your heart desires, after all—or so we want to believe. We found out whether financial planners judge your shoe-buying habit, whether they get mad if they have to repeat themselves time and time again (we hear what we want to hear), and why they don’t always follow their own advice.

1. SOMETIMES, THEY GET A LITTLE ANNOYED WITH YOU.

“I grimace when friends or clients get involved with multi-level marketing endeavors, thinking it’s a quick way to make money,” says Quentara Costa, a certified financial planner in Massachusetts. These MLMs, including LuLaRoe, Matilda Jane, and others, rarely last more than a year, but according to Costa, the outlay of funds and time you pour into developing and understanding the product could have been better spent pursuing other means of career development. “While well-intentioned, it’s my least favorite method of supplementing income because it can take years to develop business and trust within the community, as with any business venture,” he explains.

2. THEY DON’T ALWAYS APPROVE OF YOUR CAR-BUYING WAYS.

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Meghan Chomut, a certified financial planner in Thunder Bay, Ontario, says she can’t stand it when her clients overspend on vehicles. She even has a golden rule about it: The total value of all your vehicles and motorized toys shouldn’t add up to more than half of your annual income.

3. BUT THEY UNDERSTAND THAT YOU’RE GOING TO FORGET ABOUT SAVING MONEY DURING YOUR VACATIONS.

This is the time when clients tend to go off the rails, says Bill Ryon, co-founder and managing partner of the Dover, Delaware-based Compass Investment Advisors. Whenever Ryon sees clients taking distributions that are larger than what’s called for within their financial savings plan, he knows that they’re going on an international trip. “It can be a little bit of a sensitive conversation, since it is their money and I want them to enjoy themselves," he says, "however not at the expense of derailing their plan or jeopardizing their lifestyle in the future."

4. THEY BLAME YOLO.

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“If you can’t afford it, you shouldn’t do it,” Chomut says. “But then #YOLO, and all of a sudden, you’ve booked a trip to Florida. Or #FOMO you are going out to eat at a fancy restaurant with friends and putting it on a credit card," she says. "The struggle is real.”

5. THEY TOTALLY EXPECT TO REPEAT THEIR ADVICE OVER AND OVER AGAIN.

Warren Ward, senior planner with WWA Planning and Investments in Indiana, says that many years ago, his doctor told him that about half the medical issues he dealt with in his practice were optional: people overate, refused to exercise, or smoked. But they still wanted their doctor to keep them healthy. “He responded by repeating his good advice, and making medical interventions when appropriate,” Ward says. “Just like that physician, we care about our clients, and will patiently repeat our advice at every visit, knowing from experience that people can change over time and become more financially healthy.”

6. EVERY FINANCIAL PLANNER HAS THEIR OWN FINANCIAL TRICKS TO PASS ON.

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Ward is a huge fan of the “cash envelope system,” he says. Basically, you map out your spending for the week, and put that amount of cash into an envelope. “Mapping out your spending for the week allows you to know where your money goes instead of wondering where it went,” he says.

7. SOME WANT YOU TO FOCUS ON THE BIGGER PICTURE ...

“The secret is that all retirement planning is income planning and everything else is detail,” Ryon says. “I’ll have to repeat that several times, but that’s it. It helps them to focus on what’s really important and what they are planning for.” Essentially, he says, you’re saving and investing to sustain your lifestyle for at least 30 years after you retire. So if you focus on the fact that all of your retirement planning is income planning, then you’ll be able to think of your money as a machine that’ll pay the bills once you stop working.

8. ... OTHERS WANT YOU TO THINK ABOUT EVERY DOLLAR YOU SPEND.

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The key is to make a budget every single month, Chomut says. “Every dollar overspent is a dollar you have to either work harder for tomorrow, or a sacrifice you’ll have to make later.”

9. THEY DON’T ALWAYS FOLLOW THEIR OWN ADVICE ...

Ward says that the most difficult part of financial planning is convincing his clients to plan for death. That means setting aside money for the kids’ education and naming a close friend or relative as a potential guardian for those children ... just in case. “Just like my clients, I’m slow to face updating my estate planning documents,” Ward says. We don’t blame him!

10. ... BUT THEY STILL WISH YOU WOULD TRUST THEM ...

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“In our modern age of 24/7 news coverage, I think people tend to put too much emphasis on interpreting the latest headline, and then trying to act tactically in response,” Ward says. “Whether this involves making an investment decision based on world affairs, or following the weather minute-by-minute prior to a vacation, we prefer that they think strategically, formulate a plan and stick to it—of course allowing for periodic review and adjustment.”

11. ... BECAUSE AT THE END OF THE DAY, THEY’RE THE EXPERTS.

“I struggle watching one of a couple—usually the husband—claiming expertise that’s actually incomplete,” Ward says. After all, he doesn’t brag about medicine when he goes to the doctor, nor does he claim knowledge of the law if he visits a lawyer. “I try not to be judgmental, but this is an area where I struggle,” he says.

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