What to Expect from a Financial Planner

We could not have retired early without help from a Financial Planner.

We had the discipline to consistently save in our 401k and IRA accounts. Whenever we could, we increased those savings. And, we worked hard at paying down debt. But if we had not sought out professional advice, we would not have had the ability to retire while my wife was in her 50’s and I had just turned 60.

Five years before our retirement, we had questions. If we continued to save, when would we be able to retire? Should we use a chunk of that savings to pay off our mortgage? Would we be able to afford to travel? Did we need long term health insurance? What were the chances we would outlive our money?

Our retirement clock was ticking and we needed answers.

Selecting a Financial Planner

After reading a dozen books on retirement, we discovered the concept of fee-only financial planning. Fee-only advisors are independent of investment companies. They don’t get a commission for putting you in investments that may or may not suit you. They are paid by you and you alone, so your interests come first.

“Fee-Only financial advisors may be paid hourly, as a retainer, as a percentage of assets, or as a flat fee, depending upon the planner you choose.

National Association of Personal Financial Advisors

After reviewing the credentials of a number of advisors, we selected Bob, a fee-only Certified Financial Planner and scheduled a free consultation session.

First, we filled out a five page questionnaire. There were a lot of yes and no answers; about our house, our health, insurance, and company benefits. We also shared some of our goals.

  • Retire in Five to Seven years
  • Establish an Emergency Fund
  • Eliminate our Debt
  • Relocate for Retirement
  • Travel in Retirement
  • Leave a legacy – Charity / Scholarships

Then we went to meet with Bob.

Expectations and Cost

My wife and I were both a little apprehensive, but we were also excited about this new chapter in our financial lives. Bob made us very comfortable from the start. As we talked, he dove deeper into our needs and goals, and we learned about the services he offered, his fiduciary responsibility, and the cost.

Fiduciary advisors are legally obligated to put their clients’ financial interests above their own, and they have to disclose how they’re compensated and avoid potential conflicts of interest.”

Fee Only Network

We agreed to move forward with what Bob’s firm called a “Retirement Readiness Analysis.” This would include a series of meetings and about 25-30 working hours on Bob’s part. The cost (in 2014) was $2,250, of which we put $500 down.

It was time to go back home and get to work.

Doing our Homework

Over the next couple of weeks we gathered all of our financial information. My wife created a detailed spreadsheet of our monthly expenses. I gathered all of our investment account records. We tallied up our mortgage, car loan, HELOC; and our credit card debt.

We put it all together and sent it off to Bob.

Our next meeting was on the phone. Bob laid out our current net worth. We dove deeper into an analysis of our current expenses and future salary expectations. We went more in-depth on retirement expectations – such as how often we’d buy a new car. And we worked together on a plan to attack our debt and create our emergency fund.

The Emergency Fund

In the past, we’d had limited success with creating our emergency fund. The idea was first presented to us when we went through Dave Ramsey’s Financial Peace University.* It was difficult to get that first thousand dollars recommended in Ramsey’s program. How difficult? One day my wife took some of her jewelry, and visited area pawn shops. When she told me about her experiences – particularly with one seamy shop owner – I was determined never to let that happen again.

My wife’s sacrifice got us to that first $1,000. I have to say, it was a great relief to know we could take a small financial blow and not lose sleep over it. But we still had a problem. Try as we might, we just couldn’t grow the emergency fund to cover a potentially bigger expense. We were constantly tapping the account to help pay routine bills.

My wife now told Bob “We need to find a place where we can get to the money if we need it, but is difficult to reach for everyday expenses.” We put our heads together and came up with a plan that forced us to visit a teller inside the bank to withdraw money – or even know our account balance!

Our Retirement Plan

We had one more planning conversation with Bob, and then he crunched the numbers. Out came our 32-page Retirement plan!

We failed.

Financial Plan Shortfall

Based on a series of simulations, it was estimated that we’d likely we’d run out of money by the time I was 78 and my wife was 76. That was far short of our life expectancies.

When creating the plan, we had asked Bob to be conservative in his estimates. We’d looked at only minimal salary increases, and we didn’t count on bonuses that were likely, but not guaranteed. We’d also over-estimated some of our expenses in retirement such as travel. So now it was time to make a few changes.

The easy way would have been to simply increase the assumptions on our investment returns. Our initial plan assumed we would average 3% above the rate of inflation, if we assumed we could make 5.5% more than inflation, our plan would succeed. Bob didn’t recommend that, and we agreed that we wanted to stay conservative.

Instead, we discussed making some changes before retirement. That amounted to cutting our expenses by about 4% a month. And we made some cuts in our future plans, such as chopping in half what we were budgeting for future world travel (we still left enough to have some pretty nice vacations).

Bob ran the numbers for plan #2. This time, we passed!

Investment Changes

Bob wasn’t done yet. We were very conservatively invested, still feeling the psychological impact of the 2008 market crash in 2014. Bob got us to start dollar-cost averaging into investments that were more relevant for our retirement time-frame. This increased our average return in the critical final years before retirement.

Financial Planner Report
Page 1, of 32!

A few years later as retirement approached, we became more conservative with a portion of our investments. We put three years of what we would need to help with our living expenses in money market funds. That part of the plan paid off during the Coronavirus crash in early 2020. Here’s how.

Living Your Dream!

Planning for Retirement isn’t just about having a stack of money. A good financial planner will be interested in your retirement dreams as well. Whether that involves travel, charity, volunteering or just having fun; following a professionally designed plan should give you the financial security to do whatever you choose. Without worrying if you’ll run out of money while doing it.

For more stories like this, visit our Retirement Planning section.

Every situation is unique. This is why we always recommend seeking professional advice tailored for your specific needs. In addition to the links provided in this story, here are two places to check an advisor’s status.

*We receive no compensation from Dave Ramsey or Financial Peace University for the mention and links in this story. Nor do we receive any compensation for the links to fee-only financial planner organizations.

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