Are you nearing retirement age and feeling overwhelmed by the thought of financial planning? You're not alone. Most of us have faced life's unexpected twists like children, divorce, unemployment, or late starts in financial planning and find ourselves in a similar boat. If you need help, financial planning isn't just for the wealthy. Let's explore how you can make smart, impactful financial decisions, with any means.
Understanding Your Situation
Start off by taking stock of your current financial status. This includes understanding your income, expenses, assets, debts, and potential retirement income sources. Gather your tax returns and any other relevant information. Also ask for your Social Security report, credit report. Knowledge is power, especially when it comes to finances.
Understanding Your Options: Financial Coaches vs. Advisors
- Financial Coaches: Better for day-to-day money management and budgeting strategies. They can help you increase your savings and prepare for investments.
- Financial Advisors/Planners: More suitable for those with funds ready to invest. They focus on growing your existing assets. While it's true that many financial planners cater to high-net-worth individuals, there are professionals who specialize in helping those with more modest means. Look for a fee-only financial planner who charges by the hour or a flat rate, rather than one who works on commission. This ensures their advice is in your best interest.
How To Find the Financial Planning Help You Need
Financial Coaches
An Accredited Financial Counselor® (AFC®) is a fiduciary that is supposed to look out for your best interests. You can search here to see whether a coach has an AFC accreditation.
Credentials
Other coaching accreditations that don’t necessarily involve financial training include:
- International Coach Federation (ICF):
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- Description: The ICF is one of the most prestigious and widely recognized coaching organizations globally. It offers three levels of certification: Associate Certified Coach (ACC), Professional Certified Coach (PCC), and Master Certified Coach (MCC).
- Requirements: Vary by certification level, but generally include completion of ICF-accredited training programs, a certain number of coaching experience hours, and passing an exam.
- Center for Credentialing & Education (CCE):
- Description: The CCE offers the Board Certified Coach (BCC) certification, which is recognized in various coaching disciplines, including life, career, business, and executive coaching.
- Requirements: A mix of training hours in coaching, experience, and passing a comprehensive examination.
- International Association of Coaching (IAC):
- Description: The IAC provides certifications that focus on the coach's mastery of coaching skills. It's known for its rigorous assessment process.
- Requirements: Passing the IAC Coaching Masteries® exam and demonstrating practical coaching skills.
- International Association of Coaching Institutes (ICI):
- Description: A global network offering certification in systemic coaching.
- Requirements: Completion of ICI-recognized training and demonstration of coaching skills.
- European Mentoring and Coaching Council (EMCC):
- Description: Offers the European Individual Accreditation (EIA) for coaches in Europe, focusing on competence, experience, and adherence to a code of ethics.
- Requirements: Vary by level of accreditation but generally include training, practice hours, supervision, and continuous professional development.
Fee-Only Financial Planners
Look for planners who work on a fee-only basis, catering to clients with or without significant assets. These professionals can provide comprehensive planning beyond just investment advice. Notable networks include:
- XYPN Planning Network -A network for finding fee-only financial planners, with a filter for finding someone regulated and qualified for divorced women
- Garrett Planning Network – A group of fee-only financial planners
- Zoe Financial – A referral network for fiduciaries. Click on “Find an Advisor” at the bottom.
- NAPFA (National Association of Personal Financial Advisors): An organization for fee-only advisors.
- Advice-Only Network: A network of regulated fiduciary financial planners who work for a flat fee without managing assets.
- Let's Make a Plan – For finding a certified financial planner in your area from the CFP board.
Credentials
- Regulation of Specific Titles and Services:
Anyone can call themselves a financial planner or advisor, but not everyone is qualified or licensed to provide comprehensive financial planning services, especially those that involve investment management or financial advice. You have to research and verify the qualifications and regulatory standing of anyone you are considering hiring as a financial planner.
Although “financial planner” may not be regulated, other titles like “Certified Financial Planner” or “Registered Investment Advisor” are regulated. Professionals offering certain services, such as investment advice or selling insurance, are often required to be licensed and registered with regulatory bodies.
- Importance of Due Diligence:
- Because of the lack of regulation around the title, it's crucial for individuals seeking financial planning services to conduct due diligence.
- Verifying credentials, checking for any history of disciplinary actions, and understanding the planner's approach and fee structure are important steps.
- Variances by Country:
- Regulations can vary significantly from one country to another. In some countries, the term may be more strictly regulated.
- Professional Organizations:
- Many financial planners choose to become members of professional organizations (like the Financial Planning Association or the National Association of Personal Financial Advisors in the U.S.) that impose their own standards and ethics.
Here are some credentials:
- Certified Financial Planner (CFP):
- Description: Specifically for financial coaching, the CFP certification is highly regarded. It demonstrates expertise in financial planning.
- Requirements: Bachelor's degree, completion of CFP-board registered education programs, passing the CFP exam, and meeting experience requirements.
- Association for Financial Counseling & Planning Education (AFCPE):
- Description: Offers the Accredited Financial Counselor (AFC) certification, focusing on financial education, counseling, and planning.
- Requirements: Completion of coursework, an exam, and a certain number of hours of financial counseling experience.
Free Professional Help
Online Forums – Join facebook groups like the FIRE groups for community advice and support
Library – Some local libraries offer free financial planning sessions. Ensure to vet these advisors thoroughly to avoid scams.
Books – Oldies but goldies, there’s Rags to Riches, Rich Dad, Poor Dad, I’ll teach you to be Reach, Simple Path to Wealth
Employee Services – Some employers may offer access to free financial planning seminars, webinars, and workshops; personalized one-on-one advice from certified financial advisors; access to financial planning apps, online courses on budgeting, debt management, and investing; and access to discounted banking products and services. Ask your employer!
Savvy Ladies – has been providing free financial education for all women since 2003. By championing self-reliant, financially educated women, Savvy Ladies is trying to reduce disparities in financial education.
Advisors Give Back – Volunteers from the NAPFA volunteer to waive fees for qualified individuals and help plan to pay off debt and build savings.
Financial Planning Association (FPA). FPA is a national community of certified financial planners that offers over 15,000 hours of free financial planning guidance to qualified individuals. Find a pro bono FPA planner through the local chapter.
FFP Probono – Nonprofits can seek guidance from CFPs
Other references: National Endowment for Financial Education (NEFE), Consumer Financial Protection Bureau (CFPB), AARP's Retirement Planning Resources
Tips For Financial Planning:
- Budgeting and Expense Management: Start by creating a detailed budget. Track your expenses and identify areas where you can cut back. Small savings can add up significantly over time.
- Debt Reduction: If you have debts, prioritize paying them off. High-interest debts, like credit card balances, should be tackled first.
- Maximize Retirement Contributions: If your employer offers a retirement plan, like a 401(k), try to contribute the maximum amount, especially if there's a matching contribution.
- Consider Part-Time Work or Side Hustles: Supplementing your income can be a game-changer. This could be part-time work or turning a hobby into a small business.
- Downsizing: If you own a larger home, consider downsizing to reduce living expenses and possibly free up some equity.
- Investment Strategies: Even with modest savings, consider low-risk investments. Diversification is key to minimizing risks.
Start Now
Remember, it's never too late to start making smart financial decisions. With the right approach and professional guidance, you can navigate the challenges of retirement planning and secure a comfortable future. Stay positive, stay informed, and take action today!