Sometimes the Hardest Part is Just Showing Up
- 2004 18 Jun
Recently I underwent that procedure no one my age likes to talk about. As much as I dreaded the actual exam, it was nothing compared to what I went through to get ready for it. Just seeing those words on the office door made me want to cut and run: Certified Financial Planner.
But we did it. We spent several hours planning our estate with a professional, which is a pleasant way to say we talked about getting old and dying.
Actually it wasn't that bad. In fact now that it's over I'm so glad we did the hardest thing of all: we showed up. We've taken those first difficult steps required to create a realistic plan that will allow us to live the second half of our lives with joy and peace instead of fear and dread. We know specifically what we have to do in the next ten years and as our son often quotes that great philosopher GI Joe, "Knowing is half the battle."
Here's the question that started the ball rolling: "When would you like to have the option to stop working?" Selecting a date in the future gave Planner Bill a frame of reference to begin creating a plan that will allow us to do that. We pulled out the documents he asked us to bring to our appointment. He did not gasp in horror or even chuckle. This was all business for him and exactly the non-emotional approach we needed.
We left with a sizable homework assignment. Our venerable Living Trust is in need of an overhaul. We have no disability or long-term care insurance. Our investments need re-allocation as we've been using that ever popular hit and miss approach of self-directed investing. But unlike before when I could not have held a conversation about these things, I'm ready to roll because we've added a valuable member to our team in Planner Bill.
Through this exercise I've learned there are basically three types of financial planners, the difference being the way the planner is paid.
Fee-only. This type of financial planner charges a set fee, charging either by the hour as an attorney would, or a flat fee like a doctor. You will have your initial meeting and then a follow-up appointment when the planner hands you the customized estate plan developed just for you. Then he walks away. It's up to you
to implement the plan, which can be daunting.
Fee-based. This type of planning is the same as the fee-only arrangement except for the part about having to implement it yourself. With a fee-based plan the up-front fee is usually less. This is the arrangement we have with Planner Bill. Once our plan is written it's ours and he will work with us to get everything in place, up and running. If in doing that we purchase financial products like insurance or investments through his firm, Planner Bill will earn commissions. But we are not committed to buying only through him.
Product-based. In this arrangement the planner does not charge an upfront fee, but receives all of his compensation through commissions on the financial products he recommends.
You may be years away from needing the services of a professional financial planner. But you can, and should, start getting ready for your appointment now.
Get out of debt. If you are carrying unsecured debt, this is the first thing any planner worth his door plaque will tell you: Get rid of your credit card and all other unsecured debt. Easier said than done? Maybe not. I can teach you how to get out of debt quickly and relatively painlessly. Go to www.cheapskatemonthly.com and click on "RDRP Calculator Demo."
Start saving. You will need a savings account with at least six months of living expenses in it. Start saving now even if you are in debt, even if you think you can't. You can. You have to!
Know your benefits. Each year around your birthday the Social Security Administration sends you a projection of your retirement benefits. Lock eyeballs with those projected figures to keep you motivated to save, plan and invest. Don't plan to live on Social Security. If you do not have a current statement go to www.ssa.gov/mystatement.
Keep good records. Figure out a simple filing system where you can keep your important papers: Your mortgage, insurance policies, wills and investment statements. It will be a real pain to try and find all of these important documents the day of your appointment.
There was a time, and not so long ago, I would have preferred to shove toothpicks under my fingernails than meet with a financial planner. But I've changed my mind. In fact I'll take a meeting with Planner Bill any day over one that involves weight scales, blood pressure cuffs and the snapping of rubber gloves.
© 2004 The Cheapskate Monthly. All rights reserved. Used with permission.
"The Cheapskate Monthly" was founded in 1992 by Mary Hunt. What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt. Today, "The Cheapskate Monthly" is read by close to 100,000 Cheapskates. Click here to subscribe.