What is a Financial Planner – And How Can He or She Help the Ann Arbor and Chelsea Investor?

A financial planner is professional investment manager who assists clients in maintaining their desired balance of investment income, capital gains, and acceptable risk by employing proper allocation of assets. Your Ann Arbor financial planner uses a variety of investment tools: stocks, bonds, mutual funds, real estate investment trusts (REITs), options, futures, insurance products and other financial instruments to meet their clients’ needs. There are both “fee based” financial planner and those who receive a commission payment based on either the amount of the investment or the amount of the yield they return for their clients. Fee-based advisers may charge both asset-based fees as well as collect commissions. “Fee-only” advisers do not charge commissions or referral fees, but are paid only the fees agreed to between them and their clients.

The Responsibility of the Ann Arbor Financial Planner

Whether in Ann Arbor or elsewhere, your financial planner’s primary responsibility is to assist you in planning and arranging your finances. This includes overseeing savings, retirement accounts, tax planning and the creation of wills and other forms of estate planning. Financial Planner should understand their clients’ financial outlook as well as their tolerance for risk. Investments can be complicated and risky, and your financial planner has a fiduciary duty to control risk within your acceptable limits while attempting to maximize the investment yield.

Planning for Retirement in Ann Arbor – Your Financial Planner’s Role

Retirement planning is one of the primary services that your financial planner offers. Your financial planner should understand budgeting, forecasting, taxation, allocation of assets, and the financial methods necessary not only to set meaningful goals but also the tactics with which to reach those goals. US investors have a wide variety of tools at their disposal, including 401(k)/403(b) Roth account(s), Individual Retirement Accounts/Roth IRAs, mutual funds, stocks, bonds, CDs, and insurance products.

Your financial planner determines what percentage of your income is necessary to meet a reasonable set of portfolio goals at the time of your retirement. He or she should take into account tax issues, inflation and projected returns on investments. Your Ann Arbor financial planner’s greatest contribution may be the allocation of assets. He or she can determine how to maximize your return while staying within the parameters of your tolerance for risk.

Assisting the Ann Arbor Investor – The Financial Planner’s Role

Your financial planner is available to assist you with both long term goals and short term goals. Your financial planner’s job is to help set out your goals and your risk tolerance and, using that information, not only to offer you appropriate investments but to help you set them up. A longer time horizon will usually guide your financial planner toward more risky investments that have greater potential for risks as well as greater potential for reward. Some safer short-term investments can help protect you against the loss of your capital, but because their value can be diminished by inflation, your financial planner should carefully discuss the pros and cons with you.