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What To Expect Working With A Financial Planner

Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.

I have often heard people question “if financial planners are so valuable, do financial planners have their own planners”? I thought that was an interesting point, but even I had a hard time justifying the cost. Especially since I have the training and figured I could do all the work myself. What we do isn’t exactly dentistry or brain surgery–I should be able to do my own planning work right?

That’s what I thought until I got an opportunity to work with my own financial planner.


My firm is looking to partner with another planning firm. We wanted to see what the client experience is like and the quality of their work. Therefore, myself and another planner at my firm were asked to undergo the financial planning process with this new firm. Because we are looking to form a partnership, it’s safe to assume I got the best planner at their firm, Harry. And since I was involved in the partnership discussions, I met Harry and was able to discuss their behind-the-scenes process. I was even able to see how their technology works. In this case, it’s an interesting model where they work remotely and almost entirely via email and video chat. Since we are comfortable with using technology to communicate with an advisor, this didn’t seem like it would be a problem for my wife and me.

I provided all of our information through an online questionnaire and was ready and excited for the initial discovery phone call.

Discovery Call

We had a video chat and briefly went through the data that I had input. Naturally, Harry said that I had been the most thorough client he’s ever had! I think the interest and easy access to all of our data made the process very easy. The main thing that stuck out to me from our phone call was that he asked how he could provide value to us. He had already seen our data, so it was reassuring that nothing seemed to jump out at him that needed immediate correction. Instead, we discussed how we already seemed to be on the right track, but more concrete goals and a plan to reach those goals would be the most valuable outcome of the relationship.

We laid out the next three meetings and the topics that we wanted to cover. Ours were Cash Flow and Budgeting, Education Planning and Risk Management (insurance), and Retirement Planning. We discussed the other areas of financial planning, including Tax and Estate Planning (I’m a CPA), and Investment Management, that we didn’t think would be as personally valuable. I do think those are important to the planning process, but a cursory overview should be all that was needed for taxes, estate, and investments.

Initial Impressions

It is definitely different being on the other side of the table. Opening up and discussing FI with another planner and actually laying out why we want to do it and what our timeframe is, is a little daunting. I have told family and friends about it, but explaining it to a complete stranger who can see whether our plan is realistic is another thing entirely.

The biggest benefit I see with this relationship is that we will have an independent third party leading discussions between my wife and I on the plans we have laid out. To date, I have been driving the car on this plan, but it’s awesome to hear how my wife has also bought in on the idea. Additionally, our planner has been digging in on the underlying issues and money scripts we both have; in order to look at it from a personal side, rather than a technical numbers and cents side. It’s refreshing to have someone actually listen to you and ask probing questions that make you consider your motivations without trying to change your mind.

Having these discussions has allowed us to throw around the ideas we have been thinking about, e.g. homesteading, building on our newly purchased land, living abroad, and early retirement. An interesting point he made was that we are looking for vocational freedom–if I decide to not make any money this year, we should be able to do that. Different terminology, but same result right?!

At this point, we are really happy with how things are going and excited to move forward with the process. Our next call is to discuss cash flow and budgeting. We don’t expect to have any issues with our budget since we are saving between 60-70% of our income. Instead, we expect to discuss whether we’re saving too much!

Second Call

On the agenda were cash flow and risk management. In the process, we discussed money scripts and goals at length. It was a very interesting discussion, even though we seemed to linger on my deep-seated feelings and attitudes towards money.

Cash Flow

Given my background and use of Mint, I have a pretty good handle on our monthly spending. We provided our planner the last three months’ worth of credit card and bank statements and he drew up our average spending figures from those. Unfortunately, the past three months have been above average spending. Whereas we normally save between $1,000-2,000 into our taxable account every few months, his calculations showed that we were short by about $150 per month.

Harry asked why we were deferring so much into retirement accounts, as we save about $5,400 per month into our 403b, 457, 401k and HSAs. I talked about the Roth Conversion Ladder strategy and being able to control our tax bracket in retirement. He said this made sense but added that we might be stretching ourselves too thin in order to sock everything away into those accounts. I had always viewed this as an income problem rather than a savings problem and had hoped it would resolve itself in a year or two with raises or bonuses.


When we first laid out our concerns, my wife’s main concerns were having a solid emergency fund and being able to relax on spending a little. My main goal was the vocational flexibility I wrote about above. I have been always shooting towards FIRE, but have lately been coming to the realization that I am very likely to make income in retirement. Therefore, the vocational flexibility or “sabbatical” aspects of FI might be a more realistic goal.

On this call, we dug a little deeper on my feelings about my job, how I was raised with respect to money and how my parents lived their lives while I grew up and now. My parents retired in their 50s and still live extremely frugally, with around a 1% withdrawal rate. It seemed a little weird to just be talking about my money scripts, but I guess since I am the one pushing for FIRE, it makes more sense to dig into my motivations. I think there is more to come on this point, but Harry sure got to glimpse my attitudes towards work, money, and spending.

The two questions that hit home the most for me were rating my job on a 1-10 scale and comparing that to shoveling sewage (6 for my job, 3 for sewage!), and he asked me if I had purchased anything lately that I was happy to spend the money on (I couldn’t come up with anything!). I’m not sure if that gives enough insight into my psyche, but it at least shows something needs to change.

I think this discussion is where the real value lies for my wife and me in this relationship with our planner. Sure, we will get some value from reviewing our insurance policies, estate plan, and education savings plan, but since I do this for a living, we shouldn’t be too far off track there. Having a third party to facilitate these discussions will help us identify more concrete goals and lay out a realistic plan to reach them.

Insurance Review and Risk Management

I just said that I should know enough about insurance to make sure there weren’t any gaps right? Well, in this portion of our call, we identified some areas that needed cleaning up and some more coverage that we need to make sure a catastrophic event doesn’t ruin us financially.

We talked about liability, life, and disability insurance. Insurance is one of those areas where you want to lose the bet with the insurance company. It’s much better to be covered and not need the coverage than be un- or under-insured!

Liability Coverage

I had recently upped our liability coverage on our car insurance and added an umbrella policy. However, Harry recommended that we increase it a bit more. Currently, we have $1.3 million of liability coverage (1 million umbrella and 300,000 of home/auto liability). Harry recommended we increase it to $2 million combined. His rule of thumb was to get an amount equal to total assets. Given that rule of thumb, I’m not sure how he came up with the $2 million number. I spoke with an agent at work and asked the best way to get this coverage–she recommended increasing the umbrella policy rather than the auto and home liability coverages. The benefit here would be that if I was sued for something unrelated to my car or home, I would still have coverage from the umbrella policy.

Life Insurance

Next, we discussed life insurance. I have an Annual Renewable Term (ART) policy for $750,000, plus a $50,000 policy through work. My wife just has 2x her salary through work. Harry recommended increasing our coverages to $1 million each, with a level 20 year term policy. We discussed the Annual Renewable Term policy, and I explained my understanding was that ART is best when you don’t plan on keeping the policy for the full term. Compared to 10-year term, ART is cheaper for the first 7 years and more expensive for years 8-10. With 20 year term, ART is cheaper for 15-16 years and you pay more in the last years of the policy. If I’m planning to reach financial independence in 6-8 years, I figured I would drop the policy at that time and end up saving money. I committed to getting quotes and reevaluating at that time.

Disability Insurance

Finally, we discussed disability insurance. Studies show that more than 25% (!) of workers will experience a time in their careers where they are disabled and can’t earn income. Most employers provide some level of disability coverage. I have short term disability coverage of 70% of my salary and long-term disability of 60% of my salary. My wife only has 60% short-term disability, so we may need to get her a long-term disability policy. It’s always important to verify how your premiums are being paid, as that determines how your disability benefits will be taxable. In my case, my employer runs the premiums through my paycheck so I pay taxes on the premium payments and would receive benefits tax-free. On my wife’s policy, it is fully paid by the employer so any benefits she receives will be taxable. Therefore, her 60% of salary benefit is effectively 40% of her salary after tax.

Given our high savings rate, I’m not sold on supplemental disability insurance. If one of our incomes were to stop coming in, we would be fine living on the other spouse’s salary. Sure, we wouldn’t be able to save as much, or maybe at all, but we wouldn’t need that income replacement. The risk here is that we would have increased costs due to the disability, and not saving any more would throw our FI plans into disarray.

In the end, we weren’t grossly under-insured, but there are some areas that we need to consider our risk tolerance and determine whether adjustments are needed. At this point, I’m not sold on increasing my liability insurance, my own life insurance or getting long-term disability coverage for my wife. However, further discussions with our planner or other discussions with colleagues may change my mind. Ultimately, the increased costs of coverage won’t break the bank and may let us sleep better at night knowing that we are covered in the event of a catastrophic event.

Third Call

Insurance Follow Ups

On the third call, we followed up on the insurance items I was to cover and discussed an implementation plan. For the liability coverage, I had received quotes for increasing my umbrella, but the cost was $125-150 to increase my umbrella from $1m to 2m. Increasing my liability coverage on the home and auto policies combined cost $38 per year. Doing it this way will cover me up to $2m in total since the current $1m umbrella policy will stack on top of my new $1m liability coverage on the home or auto policy. Any additional benefit offered by the increased umbrella (slander, identity theft coverage) doesn’t seem worth the higher price tag.

Another point Harry made was to make sure that our per person/per accident liability coverages are equal on our auto policy. When you get auto coverage, they provide an amount towards each incident on a per accident basis as well as per person. Basic coverage is usually different per person and per accident. In this case, if I have $100,000 per person and $300,000 per accident, and two people are injured for $150,000 each, I am on the hook for $50,000 per person due to the per person maximum. If your “per person and per accident” are equal at $300,000, then you would get full coverage in this situation.

For life insurance, after getting new quotes for a $1 million policy, the incremental cost for a guaranteed level term for 20 years was only $54 per year now (for $250,000 more in death benefit), and will decrease as the ART premiums increase over time. We’re currently in the underwriting process for these new $1m 20 year term policies.

Cash Flow – Retirement Contributions

Next, we discussed the level of our retirement contributions. We discussed the Roth conversion ladder strategy again, but I think an overriding issue we have is that our cash flow is so tight given our current level of savings into tax-advantaged accounts. Harry recommended we decrease our retirement contributions, ideally to 50% of their current level. One off the wall recommendation he made was to put the additional after-tax cash flow towards paying down our mortgage.

I am not an anti-debt guy, so after much thinking about this idea, I’m still not sold. Harry’s idea was that when we eventually move from our current home, we would have built up equity that we could access tax-free towards our next home. Given where the current market valuations are, I can see where a guaranteed 3.75% rate of return (our mortgage rate) is attractive. However, given that we will be itemizing deductions every other year (since we will be bunching deductions), our effective interest rate on the mortgage is probably closer to 3%. Over a 5 to 7 year time-frame, I would hope to be able to beat that rate of return in investments. For now, I think I will bank this extra cash flow and wait and see before putting it into illiquid home equity.

Investment Allocation

Given the post I made recently about how investing more conservatively is better, you would think I have a portfolio that is allocated appropriately for our risk. Well, that’s not the case. We were actually higher than 90% stocks. Given our expected need for funds in the medium term (homestead building, job flexibility etc), Harry recommended we reduce our risk and bring our allocation down to 70% stocks in the accounts we would be more likely to use soon. With that in mind, I am bringing the allocation down to 70% stocks in our taxable account and my wife’s 457 plan.

Fourth Call

The last call was basically a recap of what we’ve done and a check in on the progress we are making. We talked about education funding, and had further discussion on what our goals are for the next few years.

Education Funding

Currently, we are saving about $500 per month into our 529 plans for our 16-month-old daughter. Any gifts that she receives from family get split, with 50% going into her 529 plan and the balance into a savings account. Given this amount of savings and the balances we currently have, Harry projected that we could cover in-state tuition of about $30,000 per year. He asked us our feelings about funding a higher education expense, such as a private school of $60-70k. My wife and I had discussed this when we first set up the 529 plans, and we still feel that covering an in-state tuition and making our children cover the additional expenses would cause them to evaluate the value provided by that higher cost education. In the end, I imagine we would help them out, but we want to instill our frugal values in our children and this seems a good method for doing so.

Therefore, if we want to budget for savings for the higher cost school or a second child, we should target between $6,000-6,500 per year to cover those costs. It was a good discussion and item to add to our budget going forward.

Further Goals Discussion

We ended our conversation with more discussion of our goals, especially my work goals. Due to my changing outlook on what retirement will look like, Harry was visibly relieved when I said it was unlikely that I would never earn income again if I hung up my work. We talked about the impact of reducing retirement contributions and the impact on our spending in retirement. Harry looked at the outcome of our plan if we never saved another dollar and instead spent everything we made (more likely the result of a decreased income than increased spending). The results were that we would meet more than 2x our retirement spending goals! That means that between now and retirement, we just have to make enough money to meet our lifestyle needs and not save anything. The flexibility that provides to both of us career-wise is incredible and will allow us to pursue a fully funded lifestyle change, instead of FIRE.

We came to this realization after our call with Harry, and it has really changed our outlook on the next 30 years of our lives. We can now reassess our goals and motivations and pursue what fulfills us rather than slaving away, less than happy, for another 5-10 years to reach the point of FIRE.

After the Fact

Now that we have completed the process, both my wife and I can say that it was really valuable. I hope our realization above drives home the point that this experience allowed us to see what is possible going forward. As a planner myself, it’s sometimes easy to come to these realizations for clients. However, it’s hard to do the same thing for ourselves. Having a disinterested party, who is not emotionally invested, review our plan and facilitate a conversation about goals and what options we have to meet our goals was just what we needed to get over the last hurdle to making a fully funded lifestyle change a reality. This process has also reaffirmed my career choice and has made me much more confident in telling others the value that financial planners can provide to clients. All the way around, we are very happy with the process and the outcomes!

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Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.
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