Most of the time, a do-it-yourself ethic is all you need to keep your finances in line. But even the smartest amateurs can use some expert advice from time to time
Most of the time, a do-it-yourself ethic is all you need to keep your finances in line. But even the smartest amateurs can use some expert advice from time to time. One of these four personal finance pros may be just the person to help you master your money issues.
1. Credit counselor
Who needs one: People in stressful financial situations. At one end of the spectrum is “the person who has some debt but no clear plan to pay it off,” says Bill Druliner, a financial counselor for GreenPath Debt Solutions, a national nonprofit credit counseling agency with headquarters in Michigan. “At the other extreme is the person who can’t pay their bills and is considering bankruptcy or walking away from their house.”
What they’ll do: Expect a long conversation about your financial situation, so your credit counselor can lay out all your options — from asking for an extension on a student loan to filing for bankruptcy — and negotiate with your creditors to set up a manageable debt payment plan. In extreme cases, a credit counseling agency will implement a full-service money management plan: They take over your paycheck and all your bills and dole out a portion of your income as an allowance. “Fewer than 10 percent of our clients do that full-service money management plan, but it can be really transformative for a compulsive spender,” says Druliner.
How much it costs: For GreenPath’s debt management plan, clients pay a monthly service fee up to $50, sometimes less. Other services, including one-on-one counseling, a personalized action plan and follow-up visits, are free.
How to find one: Check with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Look for a nonprofit credit counseling agency that charges minimally for counseling and debt management.
2. Certified financial plannerWho needs one: Anyone who wants an extra set of eyes on their money. “Certified financial planners are all-purpose,” says David Zuckerman, principal and chief investment officer of Zuckerman Capital Management, in Los Angeles. “Our aim is to help people accomplish their financial goals, whatever those may be.”
What they’ll do: With their broad training, certified financial planners can offer advice on anything money-related. You can hire a CFP if you need help with something specific, like choosing the right insurance or Roth IRA. You can also choose a certified financial planner to be your full-service money manager, partnering with you to handle your assets — and accompanying money headaches — for years to come.
How much it costs: Most CFPs are “fee only,” which means they don’t earn a commission for selling financial products. Instead, planners charge from $150 to $300 an hour, or they take a cut of your assets, usually 1 percent to 2 percent each year, if you’re handing off all your financial management. A CFP can also draw up a comprehensive financial plan for a flat fee of around $1,500.
How to find one: To earn the “certified financial planner” title, a money pro must pass a demanding two-day exam administered by the Certified Financial Planner Board of Standards. Even so, CFPs don’t all spring from the same mold, so talk with a few in your area to find someone whose ideas click with yours. “All of them are well qualified, but you want to find someone who you’re comfortable with,” says Zuckerman.
3. Retirement planner
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Who needs one: Someone who’s either already retired or right on the verge. “Ideally, we’re working with somebody five to 10 years before they retire, so we can get their finances in the proper position so that they can retire,” says Rick Rodgers, a retirement planner and president of Rodgers and Associates in Lancaster, Pa.
What they’ll do: “In the first 10 to 15 minutes, I get an idea of what someone has in assets, how much they think they’re going to spend to retire, and when they want to retire. With that information, I can tell them really quickly if they can do it or they can’t,” says Rodgers. Later, a retirement planner will dig into your financial details to formulate a plan that balances your investment portfolio, reviews your insurance and rejiggers your accounts to minimize taxes.
How much it costs: You can hire a retirement planner on an hourly basis or on retainer; more common is paying an annual fee that’s a portion of your assets under management, usually between 1 percent and 2 percent.
How to find one: Look for a certified financial planner who specializes in retirement planning. Sometimes they’re called Chartered Retirement Planning Counselors. At FPAnet.org, you can find one in your area.
4. Budget counselor
Who needs one: People who just can’t seem to make ends meet. “Most people we talk with have credit issues on their credit report and they’re not able to live within their budget,” says Deborah McNaughton, president of Professional Credit Counselors, in Orange County, Calif. Budget counselors won’t arrange a debt settlement program. Instead, they help clients “who want to retrain their thinking.”
What they’ll do: First, McNaughton has clients track their daily spending for 30 days and complete a budget worksheet; then she helps them create an action plan to find more money in their month. One client, for instance, refinanced his mortgage, which freed up an extra $1,000 a month to pay down debt. Regular follow-ups help clients break bad spending habits and stay on track to their goals. “People come to us because they want someone to be accountable to,” says McNaughton.
How much it costs: For McNaughton’s budget counseling, a three-month program, which includes a monthly in-person meeting or phone consultation, costs around $500. One-time counseling may cost between $100 and $200 an hour.
How to find one: There’s no accreditation body for budget counselors, so check out experts with the Better Business Bureau and ask for references.