Wall Street Journal- “financial planning for the not yet rich”

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People are finally figuring out that the time to start thinking about finances is now. The Wall Street Journal published a great article on financial planning for the people in their 20’s and 30’s. Mr. Opdyke states that based on the Financial Planners Association, 11% of the industry’s clients are less than 40 years old. The focus on financial planning, asset management, and the entire industry that goes with it is focused on an older crowd. This is one of the key reasons why I believe that I need to write this weblog.

The recommendation is that you should hire a flat fee planner or hire per hour planner which can average from 100-250 dollars an hour. I think that for the people who have absolutely no idea whats going on, it makes great sense to do that. If you are pretty anal about your finances as I am, then you could probably do without one. They recommend that to find one, you should ask your friends or family for anyone they know. If not, then you can check out the national association of personal finance advisors, the financial planning association, the Garrett planning network. You should look for the CFP license or Certified financial planner because that means that they have some sort of training in the field.

Mr Opdyke mentions that you need to think of finances in great detail when the “three firsts” occur: first job, first family, first child.

So how does this apply to you and I? There are some very basic things that you all need to do. Given that for most of us, finishing medical school means that it will be our first paying job. During your orientation, you will be bombarded with information from retirement planning and as soon as you graduate, you will wonder about buying a house or renting. This is where a financial planner might come handy. The caveat however is that though they may be your advisor, only you know exactly what is going on in your life and in your situation. Another thing to note is that not all financial planners are created equal. Check their credentials!

Russell Bailyn, a financial advisor whom I do not know, on his weblog discuss “the truth about fee structured financial advisors.”   He mentions that a fee only advisor should not receive any asset based fees.  You need to check if your advisor has a fiduciary responsibility to their clients.  This basically means that they are aligned with your interests and not theirs.  The way that their interests are not aligned is if their advice is commission based so their goal is to sell you stock.  I also don’t believe there is anything fiduciary about asset based fees as this makes planners complacent and their only main goal is not to help clients as much as trying to recruit more future clients.

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