INDUSTRY INSIGHT
YOUR FINANCES
SPONSORED CONTENT
A NEW PROFESSION
When I first entered the financial services business after graduating from college , you were either a stockbroker or a life insurance agent . Financial planning as a profession was in its infancy .
The College of Financial Planning was established in 1971 and the professional CFP ( Certified Financial Planner ) designation was offered later . To add some perspective , the state of New York gave its first CPA ( Certified Public Accountant ) examination in 1896 . So why has financial planning been such a late bloomer as a profession ?
The short answer is there was not much need for personal financial advice prior to the ’ 70s . Here are a couple reasons why :
Back in the ’ 50s , only a small percentage of wealthy people could afford to be in the stock market . You needed a lot of money to buy individual stocks . The entry level was high as was the risk .
Investors back then stuck with the blue-chip stocks that paid a dividend or highly rated bonds to reduce their risk . The idea of diversification was not widely understood , nor would it have been practical .
Then came along the idea of mutual funds , whereby an investor could buy a whole basket of stocks . Investors were able to lower their risk by owning literally hundreds of stocks and / or bonds within the framework of a mutual fund . Also , the threshold to purchase stocks was lowered so that many people could now afford to be investors .
At the same time , 401 ( k ) plans began to replace traditional defined benefit pension plans which were great , but expensive for employers . Employees participated in these plans and were required to make their own investment decisions .
For many , this was their first experience with investing . Today , the number of people who invest in the stock market in some way is quite high . We ’ re all investors !
Unfortunately , money doesn ’ t come with an owner ’ s manual . The markets , taxes , and the economy can be complex and ever changing .
The greater a person ’ s wealth and success , the greater the need for holistic financial , tax , and investment planning . This is why many people turn to qualified financial professionals who help them find their way through the maize and accomplish their financial goals .
Back in the day , a corporate executive had a company pension . When they retired , the pension replaced 70-80 % of their income . There was really not much incentive to save or invest . They worked to 65 , then retired with a guaranteed income for life . Income could also continue for a spouse .
There was no need to worry about the stock market . Today , there are few of these plans remaining .
Also , people are living longer and longer . I know personally about a half dozen people who will reach age 100 this year . One is 104 and doing great !
A person can be retired , living off their investments for a long time – maybe for a longer time than they spent working and accumulating . Investing wisely is not an academic exercise , it ’ s a necessity and of utmost importance . No one wants to run out of money during their lifetime .
Back in the ’ 50s and ’ 60s , it was not uncommon to see someone retire at 65 , sit on the porch for a few years and pass away in their early 70s . The social security system and pensions worked great because they didn ’ t have to pay for long . Now those systems are strained with people living into their 90s and even 100s .
Financial planning and investing are now a necessity , and you can ’ t afford to make any big mistakes . These are all reasons why a new profession has developed and continues to be recognized .
It ’ s a noble profession , and I ’ m proud to be a part of it . We help people achieve their financial and retirement planning goals , thus allowing them to focus on what is really important to them in their personal lives and eliminating their need to worry about money .
This Industry Insight was written by Garrett S . Hoge .
Garrett S . Hoge , CFP ®, ChFC ®, MS , of H Financial Management , is a private wealth manager based in Southpointe serving the ever-changing financial needs of his clients . You can contact Garrett at H Financial Management , 400 Southpointe Boulevard , # 420 , Canonsburg , PA 15317 , Phone : 724.745.9406 , Email : garrett @ hfinancial . net , or via the Web at hfinancialmanagement . com .
Securities offered through Triad Advisors , LLC , Member FINRA / SIPC • Advisory Services offered through H Financial Management .
H Financial Management is not affiliated with Triad Advisors , LLC .
PETERS TOWNSHIP | FEBRUARY / MARCH 2023 7