From a recent story about people retiring with debt, I found an interesting statement about financial planners from a financial planner interviewed in the article:
Smith says financial planners are increasingly starting to look at both sides of their clients’ balance sheets.
“Financial planners haven’t done a good job as it relates to helping people eliminate or create a strategy to eliminate debt,” he says. “Financial planners have for decades focused on the asset side of the equation and less on the liability side.”
Of course, the tide is changing.
“The good news is, as of lately, financial planners are now starting to be a little more comprehensive in focusing not only on asset side of equation, but the liability side, which will hopefully help those individuals five years out from retirement deal with the fact that they want to eliminate debt in retirement,” Smith says.
Let me state the above in plain english.
Financial planners have typically focused on your assets. That’s where they can recommend that you sell those funds to buy these stocks or these annuities, etc. In other words–your assets are where they can earn fees and commissions.
Financial planners have often ignored your liabilities because there is nothing for them to sell you! Of course, now that many brokerage firms also offer mortgages and home equity loans and there is a commission to be had, expect planners to now have more interest in your liabilities.
Related to liabilities is risk. Has your financial planner ever asked about your casualty and liability insurance on your home, on your car or blanket liability coverage? Probably not. Why? Because he doesn’t sell it and if there is no commission or fee, don’t expect him to talk about it.
What about your social security benefit? There are ways to increase your social security benefit. Has he showed you how? Not likely. He has no reason to gain this expertise because there’s no sale in it.
Some financial planners, the REALLY good planners will explore every aspect of your financial life and provide good advice. Unfortunately, in the majority of cases, financial planner means financial sales person.