Financial Planning as an African American

 When you hear the term financial planning what comes to mind as an African American?

I think of someone who can help me understand and navigate the financial system, who can help me make informed financial decisions and achieve my financial goals. I also think of someone who can understand the unique financial challenges that we face and can offer me support and guidance I need to overcome those challenges.

African American financial planners/advisors like me can offer empathy and support to African Americans because I understand the unique financial challenges that African Americans face.

Here are some specific criteria that come to mind when I think of a financial advisor:

• Trustworthiness: I want to be able to trust my financial planners/advisors with my financial information. I want to know that they are working in my best interests and that they are not trying to sell me something that I don't need.

• Empathy: I want my financial planners/advisors to understand the unique financial challenges that African Americans face. I want them to be able to listen to my concerns and offer me solutions that are tailored to my specific needs.

• Expertise: I want my financial planners/advisors to be an expert in the financial world. I want them to be able to help me understand complex financial concepts and make informed financial decisions.

• Affordability: I want my financial planners/advisors to be affordable. I don't want to have to pay a lot of money for their services, especially if I'm not sure if I can afford them.

I believe that it is important for African Americans to have access to financial planners who understand their unique financial challenges. Financial planners can help African Americans achieve their financial goals and build wealth strategy. They can also help African Americans avoid predatory lending practices and other financial scams.

If you are an African American looking for financial planners/advisors, I encourage you to do your research and find a planner like me who you trust and who understands your needs. There are many qualified financial planners who are dedicated to helping African Americans achieve their financial goals like me.

What Is a Financial Planner/Advisor?

A financial planner/advisor is a professional who provides financial guidance to individuals or businesses. They can help with a variety of financial matters, such as retirement planning, college savings, investment management, and tax planning. They can also create a long-term strategy for building wealth.

Services that a financial planners/advisors can provide:

Retirement planning: A financial planner/advisor can help you create a retirement plan that meets your specific needs and goals. They can help you determine how much money you need to save each month, and they can help you choose investments that are appropriate for your retirement goals.

• College savings: A financial planner/advisor can help you save for college in a tax-efficient manner. They can help you choose the right savings plan for your needs, and they can help you track your progress towards your college savings goals.

• Investment management: A financial planner/advisor can help you manage your investments. They can help you choose the right investments for your risk tolerance and investment goals, and they can help you rebalance your portfolio periodically.

• Tax planning: A financial planners/advisors can help you minimize your taxes. They can help you identify tax deductions and credits that you may be eligible for, and they can help you structure your investments in a tax-efficient manner.

• Estate planning: A financial planner/advisor can help you create an estate plan. This includes a will, a trust, and a power of attorney. An estate plan can help you protect your assets and ensure that your wishes are carried out after you. 

What does your dream retirement look like?

My dream retirement would be to live in a small town in the countryside, where I could spend my days traveling, cycling, gardening, hiking, and reading. I would also like to volunteer in my community and spend time with my family and friends.

A financial planner/advisor can help you build wealth and protect it for the long term.

I believe that my dream retirement would be a fulfilling and enjoyable time in my life. I would be able to pursue my passions, spend time with the people I love, and make a difference in the world.

Investments

Some financial advisors are also investment professionals, they can help you figure out how to invest and make the most of your investments. They can also help you understand the risks and what you’ll need to do to achieve your goals.

Tax Planning

Let’s face it: Nobody likes taxes. No matter how old you are, dealing with taxes can feel overwhelming—especially as you grow your wealth and get closer to that dream retirement. A financial planner/advisor can help you minimize your taxes. They can help you identify tax deductions and credits that you may be eligible for, and they can help you structure your investments in a tax-efficient manner. Tax planning is the process of managing your finances in a way that minimizes your tax liability. This can be done through a variety of strategies, such as donating to charity, creating a tax-efficient estate plan, and taking advantage of tax breaks and deductions.

The ultimate goal of tax planning is to help you keep more of your hard-earned money. After all, who wants to give Uncle Sam more than they must?

However, it is important to remember that tax planning should not be the only factor you consider when making financial decisions. You should also make sure that your investments are aligned with your financial goals and risk tolerance.

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Estate Planning

Talking about end-of-life planning can be daunting, but it doesn't have to be. After all, it's your life and your assets, so you get to decide what happens to them when you're gone. Estate planning is the process of managing your assets and liabilities in order to achieve your financial goals and protect your loved ones after you die. It includes a variety of documents and strategies, such as a will, a trust, a power of attorney, and a living will.

Health and Long-Term Care Planning

African Americans face unique challenges when it comes to health and long-term care planning. They are more likely to have chronic health conditions, such as heart disease, diabetes, and hypertension. They are also more likely to live in poverty, which can make it difficult to afford health insurance and long-term care.

As a result, African Americans are more likely to delay or forgo needed health care, and they are more likely to end up in the hospital or nursing home. This can lead to financial hardship, as well as physical and emotional problems.

There are a number of things that African Americans can do to plan for their health and long-term care needs. They should start by getting regular checkups and making sure that they are up-to-date on their vaccinations. They should also talk to their doctor about their chronic health conditions and develop a treatment plan.

African Americans should also consider long-term care insurance. Long-term care insurance can help to pay for the cost of care, such as nursing home care, assisted living, and home health care. However, long-term care insurance can be expensive, so it is important to shop around and compare policies.

African Americans should also start saving for their retirement early. Retirement savings can help to pay for health care costs in the future. African Americans should also consider working with financial planners/advisors who can help them develop a retirement plan.

There are a number of resources available to help African Americans with health and long-term care planning. The National Urban League has a number of resources on its website, including a guide to long-term care insurance and a guide to retirement planning. The National Association for the Advancement of Colored People (NAACP) also has a number of resources on its website, including a guide to health insurance and a guide to Medicare.

African Americans should also talk to their friends, family, and community leaders about health and long-term care planning. They can also get help from a social worker or a financial planners/advisors who specializes in working with African Americans.

By taking steps to plan for their health and long-term care needs, African Americans can help to ensure that they have the care they need when they need it.

Financial Advisor vs. Financial Planner

Financial advisors and financial planners are both professionals who help people with their finances. However, there are some key differences between the two professions.

Financial advisors typically focus on helping clients with investment decisions. They may recommend specific investments or investment strategies, and they may also help clients manage their portfolios. Financial advisors typically charge a fee for their services, which can be either a flat fee or a percentage of the assets they manage.

Financial planners take a more holistic approach to financial planning. They help clients with a variety of financial matters, such as retirement planning, college savings, estate planning, and tax planning. Financial planners may also recommend investments, but they typically focus on helping clients develop a comprehensive financial plan that meets their specific needs and goals. Financial planners typically charge a fee for their services, which can be either a flat fee or an hourly rate.

Financial Planner vs. Wealth Manager

Financial planners take a more holistic approach to financial planning. They help clients with a variety of financial matters, such as retirement planning, college savings, estate planning, and tax planning. Financial planners may also recommend investments, but they typically focus on helping clients develop a comprehensive financial plan that meets their specific needs and goals. Financial planners typically charge a fee for their services, which can be either a flat fee or an hourly rate.

Additionally, wealth managers typically work with clients who have a higher net worth than financial advisors. Wealth managers may also have access to a wider range of investment products and services, such as private equity and hedge funds.

How to Choose a Financial Advisor

Choosing a financial planner/advisor is a big deal, folks! This is someone you could end up partnering with for years, maybe even decades, to help you build your wealth. You’ll rely on this person for wise advice on how to invest your hard-earned money so you can retire on your terms someday.

So how do you know which financial planners/advisors is right for you? Here are some things you can do to make sure you’re hiring the right person.

1. Interview a few different advisors.

What do you do when you have two bad options to choose from? Easy! Find more options. The more options you have, the more likely you are to make a good decision.

A good rule of thumb is to try to interview at least two or three financial advisors before you decide who you want to work with. Our SmartVestor program can make it easy for you by showing you up to five financial advisors who can serve you. The best part is, it’s completely free to get connected with an advisor!

And don’t forget to come to the interview prepared with a list of questions to ask so you can figure out if they’re a good fit.

2. Find an advisor who wants to teach you, not sell to you.

You want to hire a financial planner/advisor who has the heart of a teacher. You should leave their office feeling smarter than when you walked in—that’s how you know they’re a teacher first! A good financial advisor wants you to understand the facts, your situation, the stock market and how your investment options work so you can make a wise buying decision.

3. Look for an advisor who’s qualified and knowledgeable.

Let’s cut right to it: You want someone who knows their stuff. Someone who’s on top of what’s happening in the stock market and can answer any questions you have about retirement and investing—from the difference between a Roth and traditional IRA to what stocks and mutual fund options you have.

But listen, just because an advisor is smarter than the average bear doesn’t give them the right to tell you what to do. Sometimes, advisors are full of themselves because they have more degrees than a thermometer. If an advisor starts talking down to you, it’s time to show them the door. A financial planners/advisors works for you—not the other way around. Remember that! 

4. Find out if their advice will be consistent with your beliefs.

It’s important that you and your financial planners/advisors (whoever it ends up being) are on the same page. You want an advisor who has a long-term investing strategy—someone who’ll encourage you to keep investing consistently whether the market is up or down.

You also don’t want to work with someone who pushes you to invest in something that’s too risky or you’re not comfortable with. We recommend spreading out your investments between four different types of mutual funds: growth, growth and income, aggressive growth, and international. That mix will give you the diversification you need to successfully invest for the long haul.

What Is Fiduciary Duty?

As you research financial advisors, you’ll probably come across the term fiduciary duty. All this means is any advisor you hire has to act in a way that benefits their client and not their own self-interest. If your financial planner/advisor has a fiduciary duty, they have to recommend investments that’ll best fit your needs and not their own bottom line.

How Much Does a Financial Planner/Advisor Cost?

Before you hire a financial advisor, make sure you have a good understanding of what you’re actually paying for. The cost of financial planners/advisors can vary depending on how they charge their fees. Some common fee structures are commission-only, fee-only and fee-based.

Commission-Only

 Some advisors charge a commission for their services. This means they get a portion of money when someone uses their services to invest their money.

Fee-Only

Fee-only advisors usually set up their fees in several different ways. Sometimes they’ll charge you at an hourly rate (usually somewhere between $200 to $400 an hour) based on how much time they spend working with you.2 They could also have a flat fee structure based on the services you’re getting from your advisor.

Other financial advisors charge a retainer fee based on a certain percentage of the assets they’re managing for you, which usually is somewhere between 0.2% and 2%.3

Commissions and Fees (Fee-Based)

Fee-based advisors take commissions and fees and combine them as part of their payment structure. They might charge an hourly rate to sit down with you to create an investing plan tailored for you and a commission based on the funds they recommend.

How much does a financial planner/advisor cost?

Before you hire a financial advisor, make sure you have a good understanding of what you’re actually paying for. The cost of financial planners/advisors can vary depending on how they charge their fees. Some common fee structures are commission-only, fee-only and fee-based.

Commission Only- Usually between 3-6% (based on a percentage of how much you invest)

Hourly Fee- Between $200-$400 an hour (on average)

Flat Fee- Between $2,000 and $4,000, depending on which services are provided

Retainer Fee- Usually between 0.2-2% of assets under management (AUM)