What is a Financial Planner and Do You Need One? A Simple Explanation for Kids

What is a Financial Planner & Do You Need One? Finance 101: Easy Peasy Finance for Kids & Beginners

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Introduction to Financial Planners for Kids and Teens

This video explains the concept of a financial planner in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about financial planners, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

• Kindergarten
• Elementary School
• Middle School
• High School

The topics covered are:

• What is a financial planner
• How do financial planners help their clients – what do they do
• Who are Certified Financial Planners (CFP)
• How much do financial planners charge – what are their fees
• Do you need to hire a Financial Planner

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What is a financial planner?

A financial planner is a qualified professional who helps people meet their near and long term financial goals.

Financial planners consider their clients’ goals, risk tolerance, and personal situation in order to curate a plan that works best for them.

How do financial planners help their clients? What exactly do they do?

Financial planners assess their clients’ overall financial health in order to help them meet their financial goals.

They start by asking their clients to complete a questionnaire that provides a good view of their current and forecasted financial situation, as well as their risk profile. This helps them create a comprehensive financial plan that acts as a roadmap for meeting their clients’ goals.

In addition to investment advice, a financial plan can include budgeting, tax planning, retirement planning, risk management, estate planning, etc.

Once the plan is in place, financial planners also monitor progress and make adjustments as their clients’ needs and personal situations change over time.

I’ve heard about Certified Financial Planners. What are those?

Certified Financial Planner or CFP is a very prestigious professional designation awarded to someone who successfully completes exams administered by the Certified Financial Planner Board of Standards.

A CFP is a type of financial planner formally recognized as an expert in various aspects of financial planning, including investment management, tax planning, retirement planning, estate planning, etc.

One of the most important aspects of being a CFP is their fiduciary responsibility which requires them to act in the best interests of their clients at all times.

How much do financial planners charge? What is their fee?

There are many different fee structures financial planners use.

To give you an idea about the average fees, the amount charged can be:

• A percentage of assets under management – from 0.5 to 2% per year
• A flat yearly fee – from five thousand dollars to possibly tens of thousands of dollars, or
• An hourly fee – from two to four hundred dollars an hour

Before you hire a financial planner, you need to make sure you know what services you are getting for the fee and make sure you are not overpaying for services you don’t need.

Do I need to hire a Financial Planner?

If you are disciplined when it comes to managing your money and are comfortable making decisions about taxes, estate planning, retirement, and investing; then you may not need a financial planner.

But if you are not disciplined or need help with those topics, then you should consider hiring a financial planner.

However, before hiring a financial planner, it’s best to educate yourself about these topics so you can have an intelligent conversation with the financial planner and ask the right questions.

Conclusion

Have you ever hired a financial planner? If yes, what factors did you consider?

Please let us know in the comments!

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Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

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Podcast: What is a Financial Planner