Did you know more people are taught how to dance, apply makeup and earn travel rewards than how to manage their finances? As social media becomes the go-to for life hacks, it’s also flooded with free investment advice.
Do-it-yourself financial planning is becoming more accessible as new tools and resources emerge daily. Although consumer sentiment remains dampened by still-elevated inflation and high consumer prices, the economy is starting to show cautious signs of recovery. These factors together have reignited people’s interest in enhancing their personal finances.
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Despite this enthusiasm, the Federal Reserve’s 2023 Report on the Economic Well-Being of U.S. Households found that only 68% of Americans could cover an unexpected $400 expense with cash or a credit card paid off by the next statement. The rest would need to borrow, sell something to cover the expense or simply wouldn’t be able to afford it. Americans are in dire need of financial literacy.
However, many people can’t afford professional advice. New clients often need to reduce debt and set up a meaningful budget before they can even consider investing. This can put their situation at odds with financial professionals who have minimum requirements for income, net worth or assets before accepting new clients.
Fortunately, more financial professionals are carving out niches working with low-income, traditionally underserved communities and retirees already in their distribution phase. Some offer services on an hourly or project basis, which may cost a bit more but can be ideal for investors who need extra guidance on their road to financial savviness.
For those wanting to take the DIY route, here are some resources for finding financial advice:
— Online education.
— Banks, credit unions, brokerage firms and insurance companies.
— Employee benefits.
— Robo advisors.
— Industry pro-bono groups.
— Government programs.
— Specialty groups.
Online Education
The internet is packed with resources to boost your financial literacy. You can search for specific questions, such as “How much should a mortgage cost?” or broader topics like “How to start investing?”
Online information can be helpful to resolve specific questions, but you may miss the more comprehensive financial picture. For example, you may discover how much a mortgage costs, but not learn how to determine what percentage of your income is prudent to use for a mortgage payment. Incomplete information could cause you to put forth a minimum down payment, which may not give you an optimal interest rate or may cause you to pay additional fees that would not be required with a larger down payment.
Caution is important, too, because many social media influencers are selling products and services. Some of these influencers may not have the requisite industry licensing, and their content may not follow industry regulations designed to protect consumers. You should be wary about following online advice without more verification.
Banks, Credit Unions, Brokerage Firms and Insurance Companies
Many large financial institutions offer complimentary financial advice alongside their product offerings. They often provide financial plans at a low cost or for free when you meet with one of their consultants, whether in-person or virtually. Their websites are filled with comprehensive info that is both more complete than social media, and most importantly, meets industry regulations.
Of course, their goal is that you eventually purchase their products or utilize their services, which won’t be free. Instead of paying a fee to the advisor, the institution will pay the advisor a commission, and that cost is built into the product itself. While larger institutions may have more resources available, smaller firms may offer the more personalized service new investors often need.
Employee Benefits
Employers understand that when times are good, worker morale is an important differentiator to keeping their employees from leaving. When times are challenging, benefits can increase worker wellness and reduce stress.
PricewaterhouseCoopers (known as PwC) conducted a January 2024 survey of 3,638 full-time employed U.S. adults across a variety of industries. It found that employees are struggling with high consumer prices (44%), lagging wage growth (59%) and skyrocketing credit card debt (44%). Notably, these trends have been rising due to historic inflation.
As financial stress has mounted, employees are looking more closely to their employers for relief, even as PwC found in its latest Pulse Survey that as many as 80% of CEOs are mulling cost-cutting measures, including layoffs. While employees are less embarrassed about reaching out to their workplace for guidance, only about 70% of companies currently offer any financial well-being benefits.
Congress believes that the workplace is a valuable launching ground for many workers to improve their retirement savings. Congress passed the SECURE 2.0 Act, which will require employers in 2025 to automatically enroll eligible employees into 401(k) and 403(b) qualified retirement plans, opening up new opportunities for savings and investment.
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Robo Advisors
A robo advisor is a digital platform, powered by artificial intelligence, that financial firms and banks use to provide portfolio management services and financial planning on a more cost-effective basis with smaller account holders. The platform creates recommendations based upon on a series of general questions about your financial picture. Firms also offer a wealth of educational resources organized by life events, such as the purchase of a home, a new baby or college planning.
These platforms will typically recommend low-cost investment solutions, such as passive index funds, but they can be an excellent beginning point for those with a limited amount of funds to invest and those who want to learn as they go.
Industry Pro-Bono Groups
Several financial planning organizations now offer pro-bono services for underserved clients like veterans, low-income individuals and those facing unexpected life events. For example, the Financial Planning Association and National Association of Personal Financial Advisors offer free services through their networks of certified financial planners.
The Foundation for Financial Planning offers grants, technical assistance and other training resources to key industry groups so that they can offer these free and low-cost services. You can learn more about the groups in your area that participate through the foundation’s website.
Three groups stand out with their commitment to pro-bono services:
— Financial Planning Association (FPA): Through its 76 national chapters, the FPA has offered over 15,000 hours of free guidance by certified financial planners (CFPs) to qualified individuals.
— National Association of Personal Financial Advisors (NAPFA): Through its Consumer Education Foundation, fee-only advisors volunteer to waive their fees.
— Savvy Ladies: Founded in 2003, this 501(c)(3) nonprofit has provided independent, unbiased financial advice to more than 25,000 women with topics ranging from family budgeting to debt management, retirement planning, student debt, career planning and divorce via blogs, webinars, in-person events and a free financial helpline.
Government Programs
The U.S. government, on a federal, state and local level, provides a range of services for citizens, depending on income, age and other factors. These programs include:
— Consumer Financial Protection Bureau (CFPB): This agency implements and enforces federal laws and regulations ensuring that financial institutions offer consumer financial products fairly and competitively. The CFPB also serves as the official governmental agency offering financial advice on a variety of topics such as student debt, mortgages and planning for retirement.
— Volunteer Income Tax Assistance (VITA): The IRS provides tax assistance to those who make $64,000 or less, people with disabilities or those who may have limited English-speaking capabilities.
— Tax Counseling for the Elderly (TCE): The IRS has a separate program for taxpayers age 60 and older that specializes in retirement-related issues unique to seniors.
— U.S. Department of Housing and Urban Development (HUD): This agency provides counseling services and advice on housing topics, including home loans (traditional and reverse mortgages), foreclosure, eviction procedures and credit issues.
Specialty Groups
Certain organizations cater to specific populations like seniors and small business owners. These organizations include financial planning services, and they often have additional services valuable to these niche groups. Many of them have been in existence for 60-plus years, giving them a wide variety of experience on the issues facing their constituents.
Three key groups include:
— National Council on Aging (NCOA): Since 1950, the NCOA has been an advocate for senior citizens on topics such as Medicare, Medicaid and the Older Americans Act.
— National Foundation for Credit Counseling (NFCC): An accredited national network of counselors are available to assist consumers with debt management and financial literacy, bringing relief and a brighter future.
— Service Corps of Retired Executives (SCORE): Celebrating 60 years, SCORE’s volunteer executives provide free services to help prospective owners plan, launch and grow small businesses.
Ready to Take Action?
It’s easier than ever to take control of your financial future, and you don’t have to be wealthy to start moving in the right direction.
These steps are vital to start:
— Get your paperwork organized. Set up files that you can easily access to keep copies of your payroll stubs, tax returns, housing documents and utility bills.
— Use a notebook to track your spending for one to three months. Write down every expenditure, including the date, amount, who the money went to and for what purpose.
— Get a copy of your credit record. You can do this annually for free.
— Get a copy of your Social Security earnings record.
Budgeting, tracking your net worth and correcting any errors in your key documents create the building blocks for a savvy financial future.
While free resources are great, do not hesitate to seek paid professional advice when you’re ready. Many advisors are evolving their practices to meet the needs of clients who are still building their financial foundation. By demonstrating your commitment to your financial future, you are able to position yourself as an attractive client — even if you haven’t yet amassed significant assets.
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Where to Find Free Professional Financial Advice originally appeared on usnews.com
Update 10/16/24: This story was previously published at an earlier date and has been updated with new information.
