How to Make the Federal Funds Rate Work for You

Contributed by: Kelsey Arvai, CFP®, MBA

It is worth reviewing how interest rates work and how you might consider adjusting your saving, spending, and investing strategies. Please always consult your CFP® professional regarding your specific situation and what is right for you. The Federal Reserve interest rate (also known as the federal funds rate) is the interest rate at which banks and credit unions borrow from and lend to each other. It is determined by the Federal Reserve System (also known as the Federal Reserve or simply the Fed). The Fed is the central banking system of the United States, and the federal funds rate is one of the key tools for guiding US monetary policy. The federal funds rate impacts everything from annual percentage yields (APYs) you earn on your savings to the rate you pay on credit card balances.

The Fed was first created in 1913 with the enactment of the Federal Reserve Act. A series of financial panics, specifically a severe one in 1907, led to the desire for central control of the monetary system to alleviate financial crises. The Fed is composed of several layers governed by the presidentially-appointed board of governors (known as the Federal Reserve Board or FRB). Historical events such as the Great Depression and the Great Recession have led to the expansion of the roles and responsibilities of the Fed. One of the functions of the Fed is to manage the nation’s money supply through monetary policy. Three key objectives have been established by Congress for monetary policy in the Federal Reserve Act – maximizing employment, stabilizing prices (prevention of inflation or deflation), and moderating long-term rates. The Fed largely implements monetary policy by targeting the federal funds rate – typically by adjusting the rate by 0.25% or 0.5%. The way it works is when you deposit money at a bank or credit union, those deposits provide banks with the capital needed to extend loans and other forms of credit to clients. Banks are required to keep a certain percentage of their total capital in reserve to help guarantee their stability and solvency.

The current federal funds rate is between 4.50% and 4.75% as of early February (part of the effort by the central bank to control inflation and maintain a stable economy). When interest rates are rising, make sure you look for high-yield savings opportunities, pay down credit card debt, and, if you’re looking for a car or home, make sure your interest rate reflects the current rate.

If you have a credit card, the most important strategy to focus on right now is prioritizing paying it off. While changes to interest rates will not affect your current fixed-rate loans, such as your car loan or mortgage, if you carry a balance on a credit card, the rate you owe on that money will continue to rise alongside short-term rates set by the Fed. If you cannot pay down your debt quickly, consider moving your debt over to a balance transfer credit card that could ensure you will pay no interest on your balance for a number of months.

On a positive note, rising interest rates create savings opportunities. Even though interest rates on deposits tend to correlate with the rise of the fed funds rate – you will likely earn next to nothing on your regular savings account, which typically is around 0.01%. If you have accumulated a large amount of cash in the bank above your current cash needs and emergency savings (three to six months of expenses), you might consider looking to a high-yield savings account, a money-market fund, or a one year Treasury bill (T-bill). Rates have increased quite a bit lately; the one year bill is now at 5.07%, and the two year is around 4.65%. Interest on T-bills is not taxable at the state level. Not a significant impact for Michigan residents, but if you live in a high-income state such as California, these become even more attractive. Our team has identified several money markets funds offering yields of around 4.5% (more than you would typically see at the bank).

The Federal Funds Rate is important to understand as the rate changes can impact your wallet. Ultimately, it is your own habits that are the main factor in determining your financial situation. As always, if you have any questions, feel free to contact our Team at The Center; we would be happy to help!

Kelsey Arvai, CFP®, MBA is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc.® Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Investors should consider the investment objective, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other important information, is available from your Financial Advisor and should be read carefully before investing.

Retirement Plan Contribution and Eligibility Limits for 2022

Contributed by: Kelsey Arvai, MBA

Contributed by: Robert Ingram, CFP®

The IRS has released its updated figures for retirement account contribution and income eligibility limits. Here are the adjustments for 2022:

Employer retirement plan contribution limits including 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan:

• Employee elective deferral contribution limit is increased to $20,500 (up from $19,500).

• IRA catch-up contribution limit for individuals over 50 remains unchanged at $1,000.

• The total amount that can be contributed to a defined contribution plan including all contribution types (e.g., employee deferrals, employer matching, and profit-sharing) is $61,000 or $67,500 if over the age of 50 (increased from $58,000 or $64,500 for age 50+ in 2021).

􀁸 Traditional, Roth, SIMPLE, and SEP IRA contribution limits:

• Individuals can contribute $14,000 to their SIMPLE retirement accounts (up from $13,500).

• SIMPLE IRA catch-up contributions for individuals over 50 is $3,000.

• Limit on annual IRA contributions remains unchanged at $6,000.

• IRA catch-up contribution limit for individuals over 50 remains unchanged at $1,000.

The income ranges for determining eligibility to make deductible contributions to Traditional IRAs and contributions to Roth IRAs increased for 2022.

Traditional IRA deductibility income limits:

• For single taxpayers covered by a workplace retirement plan, the phase-out range increased to $68,000 to $78,000 (up from $66,000 to $76,000).

• Married filing jointly taxpayers:

  • If the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increased to $109,000 to $129,000 (up from $105,000 to $125,000).

  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range increased to $204,000 to $214,000 (up from $198,000 to $208,000).

• For married filing separately taxpayers who are covered by a workplace retirement plan, the phase-out range remains the same, $0 to $10,000.

Roth IRA contribution income limits:

• For single taxpayers and Head of Household, the income phase-out range is increased to $129,000 to $144,000 (up from $125,000 to $140,000).

• For married filing jointly, the income phase-out range is increased to $204,000 to $214,000 (up from $198,000 to $208,000).

• For married filing separately, the income phase-out range remains unchanged at $0 to $10,000.

One strategy that has been used to accumulate dollars in a Roth IRA, even if your income level prohibits you from making regular contributions, is to accumulate non-deductible Traditional IRA contributions and then use Roth IRA conversions to move funds to the Roth IRA. This is known as the so-called “backdoor Roth IRA.” For individuals with an employer retirement savings plan, like a 401k or 403(b), that allows after-tax contributions in addition to the typical pre-tax or Roth contributions, there may be an opportunity to convert those after-tax contributions to a Roth IRA as well.

We continue to follow the proposed Build Back Better legislation going through Congress, and it’s probably not a big surprise that this continues, and will continue, to evolve. It still may be too early to tell, but it’s possible that these types of “back-door Roth IRA” strategies will go away starting in 2022.

These strategies would no longer be allowed under the proposed tax law changes in the Build Back Better plan. This year may be your last chance to use these strategies, so keep them on your radar. You can check out our blogs on “Back-Door Roth IRA” HERE and on the “Build Back Better plan” HERE.

Health Savings Account (HSA) contribution limits for 2022:

• For those with an individual high deductible health plan, HSA annual deductible contribution limit is $3,650.

• For those with a family HDHP, HSA annual deductible contribution limit is $7,300.

With increased retirement savings opportunities in 2022, we encourage you to keep these figures in mind when reviewing and updating your financial plan. If you have any questions, please feel free to reach out; we love to help! We hope you have a happy and healthy holiday season!

Kelsey Arvai, MBA, is a Client Service Associate at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

The Key To Financial Planning Is Sticking to the Basics!

Contributed by: Sandra Adams, CFP®

A colleague of mine and I were recently presenting a session on Savings for Junior Achievement for a Detroit High School class as part of The Center’s Financial Literacy initiatives. As part of our presentation, we both shared personal stories about how the fundamentals of budgeting and savings had personally impacted us during our earlier years. Why am I sharing this with you?

First, it was a good reminder that our perspective about money certainly changes over time. Thinking back, I now realize that how I think about money now is certainly different than how I thought about money in my teens and twenties. This is important especially when we are talking to our children and grandchildren about handling money.

Second, it was a good reminder that our experience teaches us good lessons. The things we have been through over our lifetimes, especially with money, sticks in our minds either positively or negatively. Positive experiences and behaviors we will tend to repeat and negative experiences and behaviors we hopefully will learn from and NOT repeat. Although some people take longer to learn than others.

Third, and most importantly, I was reminded with my own story that sticking to the financial planning basics works.

The Basics Are:

• Paying yourself first. (Building savings to yourself right into your budget!)

• Living within your means (spending first for needs and then for wants; spending for wants only if there is money in the budget).

• Building a savings reserve for emergencies.

• Building savings in advance for short-term goals.

• Not accumulating debt that is not needed and paying off any credit in the money that it is accumulated.

• And once you can do all that, building long-term savings for long-term goals like buying a house and retirement.

At one point in my life, I was in a real financial hole, but by sticking to the basics and having a lot of patience, I slowly dug myself out. And I sit here today being able to say that by following the fundamentals, you can be financially successful.  Sticking to the basics works!

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The Benefits Of Working With An ‘Ensemble Practice’

Contributed by: Josh Bitel, CFP®

Financial planning practices come in all shapes and sizes, but perhaps the two most common arrangements are solo practices and ensemble practices. Solo practices are normally led by a single advisor who calls the shots, while ensemble practices are team-oriented firms, all working toward a common goal. The Center identifies with the latter.

An ensemble practice is structured with multiple advisors under the same roof. This allows for constant sharing of ideas, best practices, strategies, and even sharing of resources. The Center has a 2 hour meeting every Monday for just this purpose. Our planners at The Center, all with unique expertise, get together to eat lunch and share client cases, tough questions, interesting reading pieces, and maybe a few jokes here and there. This is all possible because we are all working collaboratively toward a shared vision, as outlined in the Vision 2030 document our entire team had a hand in creating.

The Center, as with many ensemble practices, leverages the power of teams. We have team members who are specialists in such areas as insurance, divorce planning, tax planning, retirement planning, and many more. So if an advisor is met with a tough client case involving long-term care, for example, he or she can seek out help from a team member with expertise in this area instantly.

An often overlooked advantage for clients choosing to work with an ensemble practice such as The Center is the foundation for internal succession planning. It is often said that as an advisor ages, so do their clients. This begs the questions who will take care of me when my advisor retires? And from the advisors end, who will take care of my legacy once I’ve moved on? With a practice like ours, there is an internal succession plan in place for many years before a planner decides to retire. Often, clients are transitioned to an advisor who has been working under the tutelage of the retiring advisor.

As with anything, you must weigh the pros and cons of working with an advisor under their practice’s arrangement. In the end, it is all about finding the right person to help you reach your goals and feel comfortable along the way. At The Center, we have found that working in a team-based environment toward a shared vision helps us serve our clients the best way we can.

A Top Issue Financial Planning Clients Are Facing Due To The Pandemic

Contributed by: Sandra Adams, CFP®

We are approaching a year of living in what many are calling the “new normal”.  While the future remains unknown, last year provided us with the opportunity to reflect on what is most important in our lives.

When the health of ourselves and the ones we love is threatened, it sparks the reevaluation of our top priorities. During the Covid-19 pandemic, advisors at The Center found that clients are most concerned about the wellbeing of their families instead of short-term market volatility. Additionally, we have had more conversations about charitable giving and the causes clients want to support, especially now when so many people are in need.

I have had many conversations with clients in 2020 that reminded me of a book by Simon Sinek called “What is Your Why?” The book is about helping people find clarity, meaning, and fulfillment to find their purpose. Helping clients find their purpose is woven into the fabric of The Center. It has never been more evident and meaningful than in the last year. Even pre-Covid, after working together to learn what the client wants/needs, we can begin using their financial resources towards those goals – aka helping them LIVE THEIR PLAN.  While the past year may have shifted some of those goals (or delayed some of them – like travel, etc.), I believe that Covid-19 provided extra time, allowing many to focus on their most important goals – their WHY’s.

If you are interested in a financial planner and want to discover your “Why’s”, please reach out.  We would be happy to help you focus on narrowing those down and put those into action steps so that you can ultimately LIVE YOUR PLAN™.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

9 Actionable Steps For The New Year To Help Your Finances

Contributed by: Josh Bitel, CFP®

Yes, it’s time to turn the page on 2020 and start anew!  There’s nothing like a fresh calendar to begin making plans for your envisioned future.  We previously provided you with some tips for year-end tax planning in our annual year-end tax letter. Here, we provide you with some very specific and actionable steps you can take now. Ultimately, while no strategy can guarantee your goals will be met, these steps are a great start on improving your financial health in the New Year:

1. Take score: review your net worth as compared to one year ago.

2. Review your cash flow: how much came in last year and how much went out (hint: it is better to have less go out than came in).

3. Be intentional with your 2021 spending: also known as the dreaded budget – so think “spending plan” instead.

4. Review and update beneficiaries on IRA’s, 401k’s and life insurance: raise your hand if you want your ex-spouse to receive your 401k.

5. Review the titling of your non retirement accounts: consider a “transfer on death” designation, living trust, or joint ownership to avoid probate.

6. Revisit your portfolio’s asset allocation:

7. Review your Social Security Statement: if not yet retired you will need to go online – everyone’s trying to save a buck on printing and mailing costs

8. Check to see if your retirement plan is on track: plan your income need in retirement, review your expected sources of income, and plan for any shortfall.

9. Set up a regular review schedule with your advisor: an objective third party is best – but at a minimum set aside time on your own, with your spouse, or trusted friend to plan on improving your financial health.

So, after you promise to exercise more and eat less, get started on tackling your financial checklist!

We wish you a wonderful New Year!

Josh Bitel, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® He conducts financial planning analysis for clients and has a special interest in retirement income analysis.

7 Ways The Planning Doesn't Stop When You Retire

Contributed by: Sandra Adams, CFP®

Most materials related to retirement planning are focused on “preparing for retirement” to help clients set goals and retire successfully. Does that mean when goals are met, the planning is done? In my work, there is often a feeling that once clients cross the retirement “finish line” it should be smooth sailing from a planning standpoint. Unfortunately, nothing could be further from the truth. For many clients, post-retirement is likely when they’ll need the assistance of a planner the most!

Here are 7 planning post-retirement issues that might require the ongoing assistance of a financial advisor:

1. Retirement Income Planning 

An advisor can help you put together a year-by-year plan including income, resources, pensions, deferred compensation, Social Security, and investments.  The goal is to structure a tax-efficient strategy that is most beneficial to you.

2. Investments 

Once you are retired, a couple of things happen to make it even more important to keep an active eye on your investments: (1) You will probably begin withdrawing from investments and will likely need to manage the ongoing liquidity of at least a portion of your investment accounts and (2) You have an ongoing shorter time horizon and less tolerance for risk.

3. Social Security

It is likely that in pre-retirement planning you may have talked in generalities about what you might do with your Social Security and which strategy you might implement when you reached Social Security benefit age. However, once you reach retirement, the rubber hits the road and you need to navigate all of the available options and determine the best strategy for your situation – not necessarily something you want to do on your own without guidance.  

4. Health Insurance and Medicare

It’s a challenge for clients retiring before age 65 who have employers that don’t offer retiree healthcare. There’s often a significant expense surrounding retirement healthcare pre-Medicare.

For those under their employer healthcare, switching to Medicare is no small task – there are complications involved in “getting it right” by ensuring that clients are fully covered from an insurance standpoint once they get to retirement.  

5. Life Insurance and Long-Term Care Insurance

Life and long-term care insurances are items we hope to have in place pre-retirement. Especially since the cost and the ability to become insured becomes incredibly difficult the older one gets. However, maintaining these policies, understanding them, and having assistance once it comes time to draw on the benefits is quite another story.  

6. Estate and Multigenerational Planning

It makes sense for clients to manage their estate planning even after retirement and until the end of their lives. It’s the best way to ensure that their wealth is passed on to the next generation in the most efficient way possible. This is partly why we manage retirement income so close (account titling, beneficiaries, and estate documents). We also encourage families to document assets and have family conversations about their values and intentions for how they wish their wealth to be passed on. Many planners can help to structure and facilitate these kinds of conversations.

7. Planning for Aging

For many clients just entering retirement, one of their greatest challenges is how to help their now elderly parents manage the aging process. Like how to navigate the health care system? How to get the best care? How to determine the best place to live as they age? How best to pay for their care, especially if parents haven’t saved well enough for their retirement? How to avoid digging into your own retirement pockets to pay for your parents’ care? How to find the best resources in the community? And what questions to ask (since this is likely foreign territory for most)? 

Since humans are living longer lives, there will likely be an increased need and/or desire to plan. In an emergency, it could be difficult to make a decision uninformed. A planner can help you create a contingency plan for potential future health changes.

While it seems like the majority of materials, time, and energy of the financial planning world focuses on planning to reach retirement, there is so much still to do post-retirement. Perhaps as much OR MORE as there is pre-retirement. Having the help of a planner in post-retirement is likely something you might not realize you needed, but something you’ll certainly be glad you had.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

How to Finish Financially Strong in 2020

No one could have predicted what 2020 had to offer. The stock market saw wild swings that hadn’t occurred since the 2008 recession. Concerns over Iranian tensions and an oil war quickly took a backseat as Covid 19 spread across the world. Many other notable things happened this year, but let’s discuss how you can end the year financially strong.

Here are the top 8 tips from our financial advisors.

1. Consider rebalancing your portfolio.

The stock market’s major recovery since March may have left your portfolio overweight in some areas or underweight in others. Be sure that you’re taking on the correct amount of risk by rebalancing your long-term asset allocation.

2. Assess your financial goals.

Starting now, assess where you are with the financial goals you’ve set for yourself. Take the necessary steps to help meet your goals before year-end so that you can begin 2021 with a clean slate.

3. Know the estate tax rules.

For those with estates over $5M, be sure to review your potential estate tax exposure under both a Republican and Democrat administration.

4. Review your employer benefits package and retirement plan.

Open enrollment runs from Nov. 1 through Dec. 15. Review your open enrollment benefit package and your employer retirement plan. Don’t gloss over areas such as Group Life and Disability Elections as most Americans are vastly underinsured. Many 401k plans now offer an “auto increase” feature which can increase your contribution 1% each year until the contribution level hits 15%, for example.  

5. Take advantage of tax planning opportunities.

Such as tax-loss harvesting in after-tax investment accounts or Roth IRA conversions. Many folks have a lower income in 2020 which could present an opportunity to move some money from a traditional IRA to a Roth IRA while in a slightly lower tax bracket.

6. Boost your cash reserves.

It’s so important to have cash savings to cover unexpected expenses or income loss. Having a solid emergency fund can prevent you from having to sell investments in a down market or from taking on high-interest debt. Ideally, families with two working spouses should have enough cash to cover at least 3 months of expenses. While single income households should have cash to cover six months. Take the opportunity to review your budget and challenge yourself to find additional savings each week through year-end.

7. Contribute more to your retirement plan.

Increase your retirement account contributions for long-term savings, great tax benefits, and free money (aka an employer match).

Contributions you make to an employer pre-tax 401k or 403b are excluded from your taxable income and can grow tax-deferred. Roth account contributions are made after-tax but can grow tax-free.

If your employer plan and financial situation allow for it, you can accelerate your savings from now until the end of the year by setting your contribution level to a high percentage of your income.  Many employers allow you to contribute up to 100% of your pay.

8. Give to charity.

Is there a charity you would like to support? Make a charitable donation! Salvation Army and Toys for Tots are popular around this time.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability. Conversions from IRA to Roth may be subject to its own five-year holding period. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals of contributions along with any earnings are permitted. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion. Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 72.

Want to “Go Paperless” for Fund Prospectuses?

Contributed by: Nicholas Boguth

If you’d prefer not to receive fund prospectuses by mail, there is a way to enroll in a paperless option.

Check the front of the envelope that you receive from Raymond James. It will have the instructions pictured below. There will be a box in the top right corner with a 20-digit number in it. Go to FundReports.com or call (866) 345-5954 and enter the 20-digit code.

From there, you have the 3 options below to choose from:

1. “Go Paperless” – to receive the prospectuses by email.

2. Receive a “Notice” – rather than the full prospectus, this will be a smaller piece of mail letting you know that a prospectus is available online if you’d like to access it.

3. Receive a “Paper Report” – to continue to receive the full prospectuses by mail.

Having trouble?

If you are a current client or have a Raymond James account, please give us a call. If not, we suggest calling the customer service number on your statement or calling your financial adviser.

If you are interested in hiring a financial adviser, give us a call! The Center is a financial planning firm based in Southfield, MI that serves clients nationwide.

Top 3 Reasons Why You Need A Financial Planner

Contributed by: Josh Bitel, CFP®

1) Financial planning is complicated, but taking advice from a professional is easy.

In the age of technology, where a vast array of resources are at our immediate fingertips, “do-it-yourself” has become a much more popular strategy among Americans. For most projects, DIY is great for cost savings, but in the world of finance, this is not always practical. In financial planning, daily monitoring of your investments is sometimes required. Consider the current pandemic, with market volatility all over the map, investment opportunities can come and go in the blink of an eye. If you aren’t keeping a close eye on your finances, these opportunities can be missed. Most DIY investors already have a full-time job, so they simply do not have the time capacity that a financial planner has. Not to be overshadowed by the technical aspects of financial planning, behavioral finance is arguably just as important. As a third party, a financial planner can help mitigate the emotions that go into investing.  As my colleague eloquently wrote, investing is a lot like being a sports fan, and your financial planner can help you stay the course when the going gets rough.

2) No matter how simple or complex your financial issues may seem, an advisor can help.

Many people I’ve spoken to seem to think that financial planning is only required when you have a complex financial picture. However, this is a misguided belief, most people seek out financial help far too late in life. Financial advisors, especially CFP® professionals, are trained to evaluate both simple and complex issues and map out various routes for the best financial future. Another common belief is that financial advice is only needed when you are about to retire, however some of the most productive conversations I have had with clients have been centered around about getting on the right path early and setting your finances on cruise control.

3) Financial planning is not “only for the rich”.

One response I frequently hear that makes me squirm in my seat is that “financial planning is only for the wealthy”. Financial planning can be useful in several life events, such as a change in marital status, a job change, a growing family, or even just simply feeling overwhelmed with your financial matters. The objective of financial planning is to set someone on a path to reach their financial goals. Regardless of where you start or how large your goals may be, accomplishing those goals is what matters. Whether it be saving for a home, understanding your retirement plan at work, or establishing a debt payoff plan, a financial planner can help you make sure all your bases are covered.

Josh Bitel, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® He conducts financial planning analysis for clients and has a special interest in retirement income analysis.