Five Ways a Financial Planner Provides Value

Co-authored by Darby Affeldt, DVM, RICP, Financial Planner/Advisor to Veterinarians and Sean McTeague, CFP, Financial Planning Specialist – both with North Star Resource Group

There are many reasons veterinarians would want to consider working with an advisor to build a comprehensive and formal financial plan.  Planning and advice is often an ongoing process – not unlike the ongoing advice and relationship veterinary clients seek to optimize the health/wellness of their animals.  Our mission at North Star is “Changing Lives, Forever” and we embrace this.  Planning out our clients to help them to reach their financial goals, feel confident about their financial lives and help them to stay focused on their practices, retirement, families and perhaps generations is our Why.  

There is so much need to serve clients well in a holistic, financial planning approach as fiduciaries.  Only 33% of Americans have a written financial plan, according to Schwab’s 2021 Modern Wealth Survey. (1)

We often get asked, “What exactly is a financial plan” or “Does financially planning really help?”  We at North Star Resource Group believe it truly does.  This is especially true today.  Here are some (not nearly all) of the reasons why.

• Financial planners increase confidence

The same Schwab survey (1) found that 65% of people with a written financial plan say they felt stable, while only 40% of those without a plan felt the same level of comfort.  54% of those with a plan felt “very confident” they would reach their financial goals, compared with only 18% of those without a plan.

Having a written financial plan and recommendations gives our clients a measurable goal to work toward.  The ability to track progress allows us to make progress, reducing doubt and uncertainty in our client’s lives.

• Financial planners can lead clients to better habits

Financial planning is not just about investing; that is one part of a comprehensive plan.  Again, a veterinary analogy may be helpful.  We don’t just look at the back left leg of a limping veterinary patient!  We do a full exam to ensure we aren’t missing gaps or opportunities to better the health of our patients!  Financial planning is about what money can do for a client’s confidence and peace of mind-such as the protection which insurances offer or the security that an emergency fund can provide.  Research also shows that planning supports sound money habits as well. (1)

There are good investment and insurance strategies as well as healthy money habits.  Financial planning can help with both.  What if a well-managed portfolio had to be used up due to a premature death, disability, or long-term care event?  The comprehensive financial plan will address many of the risks our clients will face.

• Financial planners help separate a client’s emotions from their money

Financial planners steer clients away from the impulse to chase returns or flee for cover in volatile markets.  Individual financial success is not driven by market performance, but by the behavior of individual investors.

The chart below illustrates the gap of an investor’s return over time versus various indices.  Over the last 20 years, the average investor return was 4.6% less than the S&P 500.  This is because the average investor doesn’t stay invested.  Instead, they try to time the market and end up missing out on returns they would have received if they simply stayed put.

• Financial planners capitalize on opportunities and reduce losses

Not including irrational decision making mentioned previously, there are numerous mistakes that can be made because people don’t know what they don’t know.  Financial Planners (and their firms) have the necessary background and knowledge in the latest laws and market offerings to identify current strengths and weaknesses in a client’s financial plan that they may not recognize.  Doesn’t the veterinarian do the same for their own clients and patients?  Financial planning, the products, strategies, services and continually changing tax, policy and economic landscape is as vast and complicated as vet med!  

Left alone, investors may often make choices that impair their return or put their assets, their family, or themselves at risk.  The benefit planners bring of not allowing current market conditions to force clients to abandon well thought out strategies centered on goals and not performance is extremely valuable.

• Financial planners act as an accountability partner

A written financial plan is only as valuable as the paper it is written on.  The real value is in the advice and the implementation of that advice.  Winston Churchill once said, “I never worry about action, but only inaction.”  At North Star, we have a responsibility to not only provide thorough, well thought out advice to our clients as fiduciaries and advocates for them, but to help them to act on that advice.  A financial planner can act as a personal trainer for their client’s finances: providing regular assessments of where they are currently at, creating a plan of execution to get them where they want to be, and holding their clients (and themselves) accountable.

A financial planner’s value does not often show up in monthly statements.  The value of a financial planner can be added up over a client’s lifetime and over the long haul, we see evidence that this advice plays a significant role in our client’s success.  The real value a financial planner brings to their client is a sense of security, a path to long-term prosperity and financial freedom, and confidence they are doing the right thing.