Should You Hire a Financial Planner in Your 30’s?

It’s entirely possible to DIY your finances in your 30’s. There’s no shortage of information online, and technology has made investing and monitoring your finances easier than ever.

That said, there does come a point where life takes over - and you get too busy. Or your situation gets more complicated, and understanding the different moving parts and financial tradeoffs is too much to figure out alone. This is when a financial planner can help.

What does a financial advisor actually do?

All financial advisors are different. Some focus only on investment management, others specialize in insurance products. Financial planners typically focus on financial planning and investment management for families. The point is, what an advisor does varies widely by advisor.

At Voyage, we help families in their 30s in the following ways:

Spending Plan

We help you fit your budget around your ideal lifestyle. This means thinking about the things that really matter in your life and identifying the things that don’t - leaving room for living expenses, savings, and fun money.

Thinking Through Major Life Changes

Life changes fast in your 30s. As your life changes, your finances change with it. We help you prepare for starting a family, caring for a parent/grandparent, changing careers or employers, sending your kids to college, preparing for retirement, and more.

Employee Benefit Optimization

If you’re married, there’s a good chance you have several overlapping benefits. You and your spouse’s employer could offer health insurance, retirement, life & disability insurance, and fringe benefits. We help you sort out which benefits you should be taking advantage of. This means evaluating health insurance plans, employer sponsored retirement plans, group insurance policies, and more.

Early Investing Decisions

Investing in your 30s is all about establishing a strong foundation. We’ll help you understand the short-term and long-term benefits for different account types (such as Roth IRA, Traditional IRA, or Taxable accounts), and how much you should be saving towards each.

Tax Planning

Tax planning can take many forms depending on the type(s) of income you receive and how you file your taxes. In your 30s, it can look like monitoring your income tax brackets for current years, while finding future tax deductions for upcoming years.

As your life changes your taxes change too. Child tax credits fall off as your kids age past 16. Pay raises increase your taxable income. Tax planning helps you understand how your tax obligations evolve and gives you a course of action to prepare.

Planning for Major Purchases

Large purchases, like buying a home, not only take time to save for, but have lasting financial commitments. In some cases, saving for a large purchase means forgoing savings towards other financial objectives - like college savings or retirement. We help families understand the tradeoffs that come with saving for large purchases, where those savings should go, what the long term financial implications will be.

Paying Down Debt

For many, large purchases in your 20s and 30s are funded with debt - student loans, mortgage, and personal loans. For some, credit card balances creep up to an uncomfortable point.

We help you find the most efficient way to pay off that debt, whether refinancing debt makes sense, and which Income Driven Repayment plan (if any) can help you pay off student loan debt.

How much of your finances can you DIY in your 30s?

It entirely depends on what you’re comfortable with doing yourself, and what you want help outsourcing. Some easy things you can manage yourself:

Budgeting & Cash Flow Management

The conventional 50/30/20 rule for budgeting is pretty simple to understand: 20% goes to savings, 50% goes to fixed expenses, and 30% is left for fun money.

DIY makes sense if you’re consistently hitting your 20% savings mark. If that’s not the case, a spending plan and some accountability could help.

Debt Management

DIY could be an option if you understand and are confident with:

• Types of Debt & How Interest Rates Work
• Debt Paydown Methods
• Student Loan Repayment Plans
• Refinancing Decisions

Investing & Retirement

Today’s retail investing landscape is far more robust than it was for your parents at your age. Low-cost index funds, commission-free trading, and the ability to purchase fractional shares have simplified investing for non-professionals. DIY could be an option if you’re confident with:

• Portfolio Construction
• Trading & Rebalancing
• Ongoing Monitoring
• Consistently Saving

In your 30’s, investing is less about strategy and more about consistency. Being a consistent saver takes you further than refining your investment strategy.

What situations tend to make an advisor worth considering?

Over the years, I’ve found that people in their 30s hire an advisor for different reasons, such as:

• Wanting a second opinion / accountability, not just information
• Time is too constrained to manage finances / get the quick answer
• Going through a job change / old 401(k)s to consolidate
• Saving for multiple goals at once (eg. balancing college and retirement savings)
• Receiving an inheritance
• Rising income and a first look at real tax planning
• Marriage, kids, or blended-family considerations

What does it cost to work with an advisor?

How you pay and what you pay to work with an advisor varies widely. There are three types of advisors: commission-based, fee-based, and fee-only.

Commission-based advisors typically offer financial planning as a free service. Of course, nothing is free. The financial plan typically comes with recommended products to purchase, such as mutual funds, annuities, and life insurance. These advisors are paid a commission from the products they sell.

Fee-based advisors charge you directly for advice, but they can also earn commissions from products they sell you. Some fee-based advisors act as fiduciaries for certain services, and as commission-based advisors for others. That mix can make it harder to know whether advice is being driven by your needs or by what pays the advisor more.

Fee-only fiduciaries are compensated solely by their clients, through a flat fee, hourly rate, or percentage of assets under management, and they never accept commissions from any product. Because their pay isn’t tied to the products you buy, they face fewer conflicts of interest than fee-based or commission-based advisors. Many people find this structure the easiest to trust, because what you pay and what you get are more transparent.

There is typically no cost to work with a commission-based advisor, aside from what you buy. Both fee-only fiduciaries and fee-based advisors charge a fee for service(s). How much the fee is, how it’s calculated, and how you pay it changes from firm to firm.

Flat-Fee Planning with Voyage Wealth Management

Voyage Wealth Management is a Fee-Only Fiduciary. We offer financial planning services on a flat-fee basis, meaning you pay a one-time flat fee for a 6 - 12 month planning engagement.

Once we complete the financial plan, you can choose to hire Voyage for investment management. At that point, our standard Assets Under Management fee applies, which pays for investment management and minor financial plan adjustments.

You can learn more about our services and approach to flat-fee financial plans here.