What Is a Financial Planner and When Do You Need One?

Developing a financial plan is one of the most important things you can do to ensure a secure future. A good financial plan provides a roadmap that takes you from the earliest days of your working life to retirement.

Read: How To Build Your Savings From Scratch

The problem is, not everybody has the expertise to develop a financial plan on their own. This is where professional financial planners come in. Keep reading to learn more about what financial planners are, what they do and how they can make a positive impact.

What Is a Financial Planner?

A financial planner is a type of financial advisor whose main role is to help clients plan for the future. When you hire a financial planner, you gain access to a trained professional who can help you develop a strategy to attain short- and long-term financial goals. Financial planners can help you with the following tasks:

• Help you manage your budget

• Offer advice on setting and meeting specific financial targets

• Provide guidance on everything from investments to tax planning

All financial planners should have training and education specific to the role. Keep in mind that not all are regulated by industry groups such as the Financial Industry Regulatory Authority or the Securities and Exchange Commission. This differentiates financial planners from similar professionals like investment advisors, who must register with government regulatory bodies. However, many financial planners pursue professional credentials that require them to meet certain professional standards.

What Exactly Does a Financial Planner Do?

A good financial planner will help guide you on all aspects of your financial life. This could involve the following:

• Developing strategies for retirement savings and investments

• Help you in preparing for large purchases such as a new home

• Preparing you for the fiscal responsibilities that come with marriage and family

• Assist you in developing budget and spending plans

• Many also help with tax and estate planning as well

Because their expertise has to be so far-ranging, financial planners typically have an education — and often a certification — in areas like wealth management and investing principles and products. They are expected to act as fiduciaries and always put client interests ahead of their own.

In certain roles — such as independent investment advisors or registered representatives — financial planners must be registered with FINRA so they can offer direct investment advice to clients.

Some financial planners specialize in a specific area such as investments or taxes. Others, including CFPs, offer advice on everything from budgeting and insurance to taxes, investing and retirement planning.

Do You Need a Financial Planner?

Everyone needs a plan for their finances. Whether you need a financial planner depends on your financial situation. If your finances don’t include much more than a couple of bank accounts, then you’re probably safe to develop a plan on your own.

But as you begin to earn more money, make investments, buy a home, start a family and build up retirement savings, enlisting the help of a financial planner can be a huge benefit. You need to keep in mind that once you reach a certain level of wealth, managing your investments and making the right financial decisions takes time, skill — and effort. Even if you do put aside the time and effort during your off hours, chances are you’d rather be doing something else, like exercising, dining out or traveling.

What Is a Normal Fee for a Financial Planner?

Most financial planners either charge a flat fee or an hourly fee. However, some charge a percentage of the assets under management they handle for investment clients, typically between 1% and 3%. Clients who only meet once or twice to create a financial plan or get advice are usually charged between $100 and $300 an hour. Those who want a longer-term relationship to help create and maintain a financial plan might pay fixed fees of $1,000 to $3,000.

With those fees, is paying a financial planner worth it? Whether or not paying a financial planner is worth it is an individual choice. Fees can get expensive, but if a planner can successfully organize your financial life, save you money on taxes or earn you more through your investments, it may very well be worth it.

What’s the Difference Between a Financial Planner and Financial Advisor?

Depending on who you ask, there’s not much difference between the two. A financial advisor is essentially a catch-all term that might include many different professionals who help clients with their money. There are a lot of these folks; FINRA lists more than 200 professional designations within the financial services industry. Broadly speaking, a financial planner is a type of financial advisor who provides guidance on budgeting, investing, taxes, retirement, family expenses and saving for large purchases.

There is a difference between a CFP and a “run of the mill” financial advisor, however. The CFP is a professional designation administered by the nonprofit CFP Board. They have a bigger focus on holistic financial planning vs. investment management, although that also plays a role. Although all registered representatives must be licensed, they don’t all have to go through the rigorous testing that CFPs do, nor are they subject to as much continuing education and ethical requirements.

The Bottom Line

Not everyone needs a financial planner, but for those that do, they can be immensely valuable. Check your own financial needs and weigh the costs of hiring a professional against the benefit you’d be receiving. If you’re just trading stocks, for example, you might not need a full-blown financial planner. But if you have a family, a home, sizable assets or a complicated financial life, you may be the perfect candidate.

Chris Chisholm and John Csiszar contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: What Is a Financial Planner and When Do You Need One?