Knowing where to allocate your next dollar can be confusing for those looking to save and invest. There are many choices available. Just like building a house, it’s important to start with a strong financial foundation. Focus on the basics like budgeting and an emergency fund as you begin building your wealth.

Let’s break down each layer and explore why it matters.

Step 1. Emergency Reserve: Your Financial Safety Net

Before investing, it’s crucial to build an emergency fund as your safety net. Life happens: cars break down, kids get sick, jobs change. Without a cushion, these unexpected events can derail long-term financial goals.

We recommend saving three to six months’ worth of living expenses. You might save closer to three months’ worth of expenses if your household is dually employed with strong job stability, or closer to six months if you are a single filer, self-employed, or have dependents.

Parking these dollars in a money market or high-yield savings account can provide a modicum of interest while maintaining liquidity, so you can easily withdraw these funds, not if an emergency happens, but when.

 Step 2. Maximize Employer Match: Don’t Leave Free Money Behind

If your employer offers a match on retirement contributions, take full advantage. For example, if you elect 3% of your pay to go towards your retirement plan, your employer will contribute an additional 3% to your account that you wouldn’t receive otherwise.

Ensure you are contributing the minimum to receive the full match; otherwise, you’re leaving free money on the table.

Step 3. Pay Off High-Interest Debt (Interest Over 7%)

High-interest debt, especially credit cards, can erode wealth faster than investments can grow. The average credit card interest rate in 2025 is over 21% , making it a top priority to eliminate.

Paying off high-interest debt quickly is not only an immediate return on investment but will also provide additional cash flow and wiggle room in your budget.

This assumes that a diversified portfolio may earn 7.0% over the long term. Actual returns may be higher or lower. Generally, consider making additional payments on loans with a higher interest rate than your long-term expected investment return.

Step 4. Health Savings Account (HSA): Triple Tax Advantage

A Health Savings Account (HSA) is one of the most tax-advantaged saving tools. You can put money in tax-free, which can then use it tax-free for qualified medical expenses. Consider investing your HSA funds once you’ve built up a sufficient cash buffer for near-term medical expenses. This allows you to take full advantage of the triple tax benefit!

The 2025 annual HSA contribution limit (for all contributions made by both you and your employer) are $4,300 for individuals and $8,550 for family coverage. Additionally, individuals age 55 or older can contribute an extra $1,000.

Bonus: After age 65, funds can be used for non-medical expenses without penalty (though taxed as income), making HSAs a powerful retirement supplement.

A high-deductible health plan is needed to contribute to an HSA. This investment vehicle may not be the best choice for you if you have frequent medical expenses. Those taking Social Security benefits age 65 or older and those who are on Medicare are ineligible. Tax penalties apply for non-qualified distributions prior to age 65; consult IRA Publication 502 or your tax professional.

Step 5. Additional Defined Contribution Savings

Once you’ve maxed your employer match in your 401(k), consider contributing beyond the match percentage, as your cash flow and budget will allow.

Compound growth and tax deferral make these accounts ideal for long-term wealth building. A general rule of thumb is to aim for 15% of your income going toward retirement. The earlier you start, the more compound interest works in your favor.

In 2025, employees can contribute up to $23,500 to a 401(k), with an additional $7,500 catch-up for those 50 and older.

Roth 401(k) Option: Many plans offer a Roth 401(k) feature, allowing you to contribute after-tax dollars. While you don’t get a tax deduction up front, qualified withdrawals in retirement are tax-free. This can be a powerful strategy for younger savers or those expecting higher tax rates in retirement.

Step 6. Pay Down Lower-Interest Debt (Under 7%)

While not as urgent as high-interest debt, paying off loans under 7% still improves cash flow and reduces financial stress.

Step 7. IRA Contributions: Flexibility and Tax Benefits

You’ve paid off your debts, have a solid emergency fund, and are maxing out your 401(k) and HSA accounts. What’s next?

Traditional and Roth IRAs offer additional retirement savings options. In 2025, the contribution limit is $7,000, or $8,000 for those 50+. Income limits for deductibility and Roth eligibility have increased, making these accounts more accessible.

Roth IRAs allow for after-tax contributions with tax-free growth and withdrawals in retirement.

Income limits may apply for IRAs. If ineligible for these, consider a non-deductible IRA or an after-tax 401(k) contribution. Individual situations will vary; consult your tax professional.

Step 8. Taxable Accounts: For Flexibility and Liquidity

Finally, once all tax-advantaged accounts are maximized, taxable investment accounts provide flexibility. They’re ideal for goals that fall outside retirement, like early retirement, home purchases, or estate planning.

Our favorite part: there are no annual contribution limits and no penalties for withdrawal.

Final Thoughts

Saving wisely for your future doesn’t have to be complicated. By following a structured approach, you can make confident decisions about where to allocate your money, step by step, dollar by dollar.

Want help applying this to your own financial picture? Let’s talk!

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Disclosure:This content is for informational and educational purposes only and is not intended as investment, legal, or tax advice. The strategies and steps outlined—such as building an emergency fund, contributing to employer-sponsored plans, paying down debt, or using HSAs, IRAs, and taxable accounts—are general in nature and may not be appropriate for every individual. You should consult a qualified financial or tax professional before making decisions based on your personal circumstances. There is no guarantee that following any financial strategy will achieve your goals or protect against loss. References to interest rates, contribution limits, or tax rules reflect information available at the time of publication and may change. Past performance is not indicative of future results. Advisory services are offered through Human Investing, an SEC-registered investment adviser.

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We live in a world where money feels more complicated than ever. There are more choices, more opinions, and more pressure to get it right. And because money is personal and often emotional, and it can be hard to know where to begin.

After working with hundreds of families, one thing stands out: the people who feel most confident about their finances aren’t the ones with the highest returns. They’re the ones with a system. A simple, repeatable process for managing cash flow, expenses, and uncertainty.

And for most people, that system starts with how you hold cash. The key is giving it structure.

That’s why I use a three-bucket approach:

1. One bucket for the everyday—bills, groceries, and life’s basics.

2. One for the unexpected—emergencies, repairs, and surprises.

3. And one for the future—a place for your cash to grow and outpace inflation.

It’s not flashy. But it works. And in a world full of noise, systems that work quietly are often the ones that matter most.

Bucket One: Daily Life

This is your foundation. The money that pays for groceries, gas, the electric bill, subscriptions and everything else that keeps your life moving. It’s not meant to grow. It is meant to flow—steady, predictable, and low stress.

Purpose: Keep life steady. Pay your bills without stress.
Where to keep it: A checking account you trust.
What to keep in mind:

• Aim to match your monthly spending – money in and money out, with a small buffer.

• Enough to avoid dipping into savings or taking on credit card debt for the basics.

• Not so much that you’re leaving money idle for no reason.

Too much in this account means money is sitting still and losing ground to inflation. Too little, and small surprises can throw everything off.

Cash in this bucket is like oxygen: you don’t think about it when it’s there, but when it’s not, nothing else works.

Bucket Two: The Buffer

No one plans for a broken transmission. Or a surprise tax bill. Or a layoff. But those things happen. That’s why this bucket exists not to help you get ahead, but to keep you from losing ground when life doesn’t go to plan.

It also covers the bigger, less frequent expenses you can anticipate. Things like replacing your car, covering a major home repair, or helping a child with college or a wedding. If it’s a larger expense and you expect it within the next five years, it belongs here. Planning for these ahead of time keeps them from becoming financial emergencies when they arrive.

Purpose: Provide breathing room when the unexpected shows up.
Where to keep it: High-yield savings, money market funds, or short-term Treasuries. These are safe places where your money is still accessible and earning more than a checking account.
What to keep in mind:

• Cover 3 to 6 months of essential expenses.

• Add extra for planned one-time costs like a new roof, tuition, or a car.

• Focus on after-tax interest. Earning a bit more here helps these dollars avoid quietly shrinking under the pressure of inflation.

This is the bucket where it makes sense to look for a little more yield. That might come with a small sacrifice in liquidity. Your money may take an extra step or a day or two to access. But that added friction can be useful. It creates a natural pause that gives you a moment to think before reacting. Sometimes, having to slow down is exactly what protects you from making a decision you might regret.

This bucket may not make headlines, but it builds resilience. It helps turn unpredictable moments into manageable ones and keeps you moving forward with confidence.

Calculating the right amount is important. But holding too much here can also create risks. Cash that sits for years without a purpose slowly loses value. That is where the third bucket comes in.

Bucket Three: The Future

If Bucket One is about staying afloat and Bucket Two is about staying safe, Bucket Three is about moving forward. This is where your cash begins working toward the future, whether that is your own retirement, future generations, or a lasting legacy. It is not for today, and probably not for next year. It is for the life you are building over the long run.

Purpose: Grow your money in a way that keeps up with, and ideally outpaces, inflation.
Where to keep it: A diversified investment portfolio aligned with your goals and timeline, whether growth, income, or a mix of both.
What to keep in mind:

• Time in the market is more powerful than trying to time the market.

• There can be periods where the market goes down, but in the end the market is undefeated. 

• Emotional decisions often cause more harm than poor performance ever will.

This is also a place where working with a fiduciary financial advisor can be especially helpful. An advisor can help you figure out how much to invest, how often to do it, and which types of accounts are the best fit for your goals. They provide structure, help you stay focused, especially when the market makes it tempting to second-guess your plan.

Final Thought: The Real Goal

Getting your financial life in order starts with building a system that makes the rest of your decisions easier. A system that keeps you steady when things get noisy. A system that gives every dollar a job.

The three-bucket approach is simple by design. One bucket to keep life running. One to absorb the unexpected. One to grow for the future.

As author James Clear puts it, “You do not rise to the level of your goals. You fall to the level of your systems.” The families who feel most confident about money aren’t the ones with the biggest portfolios. They’re the ones with a clear, repeatable system they trust, especially when things get hard.

This isn’t about wringing the highest return out of every dollar. It’s about creating margin, building structure, and letting consistency do the heavy lifting. In personal finance, small steady steps beat frantic leaps.

Start with where you are. Build a system that fits your life. And trust that simple, well-built plans often lead to the strongest outcome.

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Disclosure: Investment advisory services offered through Human Investing, an SEC registered investment adviser. Investments involve risk, including the potential loss of principal. Diversification does not ensure a profit or guarantee against loss. Past performance is no guarantee of future results. This material is for informational purposes only and is not intended as individualized investment advice. Any references to market trends or economic conditions are for illustrative purposes and may not reflect future developments. Consult with a qualified fiduciary advisor before making financial decisions.

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Financial markets have become increasingly complex, making it difficult for individual investors to navigate successfully on their own. Investors often face the question of whether hiring a financial advisor truly provides enough value to justify the fees.

Recent comprehensive research by Vanguard, DALBAR, and other industry experts provides compelling evidence that professional financial advice offers significant value beyond basic investment selection. 

A case for having a pro on your side

Skepticism toward the financial advice industry is understandable—bad experiences, opaque fee structures, or conflicts of interest have burned many investors. Stories of sales-driven advice and misaligned incentives have cast a long shadow. This article is not a defense of every advisor, but rather a case for how true fiduciary advice—delivered transparently and with accountability, can provide measurable value in an increasingly emotional and volatile investing environment.

This emotional volatility is not hypothetical. We live in an era of heightened uncertainty, with rapid market shifts and global instability testing investor patience. As Fisher (2025) highlights in The Psychology of Market Patience, staying invested through turbulence demands far more than logic—it requires resilience. In these moments, the steady presence of a fiduciary advisor can serve as both guide and guardrail, helping investors remain committed to their long-term goals.

Professional advisors serve not only as planners and portfolio managers but also as behavioral coaches and accountability partners. This role is becoming even more essential as emotional decision-making erodes individual investor returns. The following sections explore how advisors can help improve portfolio outcomes, increase the likelihood of meeting financial goals, and reduce the emotional cost of investing.

They help enhance your portfolio performance

One of the most critical aspects of working with a financial advisor is the potential for improved portfolio performance. Contrary to the popular belief that advisors primarily add value by outperforming the market, research indicates that the most meaningful advisor contributions come from disciplined investment strategies. Advisors employ practices such as improved diversification, regular portfolio rebalancing, and tax-efficient investing, each enhancing long-term returns (Pagliaro & Utkus, 2019).

Vanguard’s research quantifies this benefit, estimating that financial advisors may add about 3% per year in net returns compared to a typical self-directed investor (Kinniry et al., 2022). This incremental gain, compounded over years, translates into significantly greater wealth accumulation.  

They can walk with you through turbulent times

According to DALBAR’s 2024 Quantitative Analysis of Investor Behavior (QAIB) report, the average equity investor significantly underperformed the market. In 2023 alone, the typical equity investor earned 5.5% less than the S&P 500, marking the third-largest performance gap in the past decade (DALBAR, 2024). This underperformance primarily results from emotionally driven investment decisions, such as selling assets during downturns and missing subsequent rebounds.

DALBAR’s findings further illustrate this emotional cost during turbulent periods. For example, the average equity investor saw returns of -21.17% in 2022, compared to the S&P 500’s -18.11%. Even in the strong market rebound of 2023, investors again lagged the market substantially, achieving only 20.79% returns versus the S&P 500’s 26.29% (DALBAR, 2024). Such significant performance gaps highlight the crucial role of advisors in mitigating harmful investor behaviors.

they can lead you to your goals with precision

Beyond portfolio management, financial advisors significantly enhance investors' ability to achieve long-term financial goals such as retirement security. Vanguard’s study on Personal Advisor Services (PAS) reveals that advised investors have an 80% or higher chance of successfully meeting their retirement goals compared to investors without professional guidance (Pagliaro & Utkus, 2019).

The role of fiduciary advisors—professionals legally obligated to act in the best interests of their clients—is particularly critical. According to Sheldon Geller, fiduciary advisors are required to disclose and mitigate conflicts of interest, ensuring investment decisions prioritize client goals over personal or company gain. This fiduciary responsibility provides investors with assurance and confidence, contributing to better financial outcomes (Geller, 2017).

They provide emotional stability

One of the most valuable yet often overlooked benefits of financial advice is the emotional stability it provides. Behavioral finance studies show that individual investors frequently succumb to emotional biases such as overconfidence, excessive trading, and holding onto losing investments too long.

Maymin and Fisher (2011) emphasize the value financial advisors add through behavioral coaching, helping clients avoid impulsive decisions during market downturns. Vanguard's research quantifies this emotional benefit, attributing between 0 and 2% in additional annual returns to behavioral coaching alone (Kinniry et al., 2022). Trust and personal connection further account for nearly half of the perceived value in advisor-client relationships, empowering clients to stay committed to their investment strategies during volatile periods (Pagliaro & Utkus, 2019). 

They will help you stick to a long-term strategy

Investor discipline, encouraged by advisors, remains critical for achieving optimal returns. DALBAR’s findings underscore how investor behavior significantly impacts returns. The report indicates that investors who maintain long-term strategies, supported by professional guidance, substantially outperform those who make emotional decisions (DALBAR, 2024).

The historical evidence from DALBAR’s extensive research over the past 30 years consistently shows that emotional investment decisions are detrimental. Advisors counteract this by instilling discipline, maintaining structured investment strategies, and reinforcing long-term thinking, resulting in better investment outcomes.

find an advisor who helps you go further than you could alone

Despite substantial evidence supporting the value of financial advice, some investors remain skeptical, often due to isolated cases of underperformance by certain advisors. However, focusing solely on short-term investment returns can be misleading. The primary value of financial advice lies in comprehensive financial planning, disciplined behavioral coaching, and fiduciary oversight.

Investors should critically evaluate advisors based on their holistic service offerings, transparency, and fiduciary commitment rather than just short-term market performance. Effective advisors deliver measurable benefits through strategic planning, emotional guidance, and long-term investment discipline.  

being a FIDUCIARY matters

Understanding the differences among fiduciary, quasi-fiduciary, and non-fiduciary advice is essential. According to Fisher (2025), only about 4.92% of financial professionals in the U.S. operate as fee-only fiduciaries, legally obligated to place their clients' best interests above their own and disclose any potential conflicts of interest. Quasi-fiduciary advisors might follow fiduciary standards selectively or in certain situations but may still receive commissions or have other conflicts of interest. Non-fiduciary advisors, such as brokers, typically operate under suitability standards rather than fiduciary obligations, often leading to decisions that may not align with optimal client outcomes (Fisher, 2025).

The distinction between these advisory models is critical for investors. True fiduciary advisors provide greater transparency, reduce conflicts of interest, and often result in higher client satisfaction and better long-term financial outcomes. 

Invest wisely with professional guidance

Navigating today's financial landscape alone poses substantial risks, primarily due to emotional biases and complex market dynamics. Research from Vanguard, DALBAR, and leading financial experts clearly demonstrates the profound impact professional financial advisors have on investor outcomes. Advisors not only enhance portfolio returns but also significantly increase the likelihood of achieving critical financial goals and provide invaluable emotional reassurance.

Ultimately, investors who recognize and leverage the full spectrum of benefits offered by professional financial advice position themselves to achieve greater financial security, resilience, and long-term success.

References:

DALBAR. (2024). Quantitative Analysis of Investor Behavior (QAIB) Report. DALBAR, Inc. Retrieved from www.qaib.com

Fisher, P. (2025, April 6). The psychology of market patience. Human Investing. Human Investing. https://www.humaninvesting.com/450-journal/psychology-of-market-patience

Fisher, P. (2025, February 14). An analysis of investment advisor representatives and bureau of labor statistics data: Determining the percentage of financial advisors acting as true fiduciaries. https://www.humaninvesting.com/450-journal/only-5-percent-of-advisors-are-true-fiduciaries. Human Investing.

Geller, S. M. (2017). Retaining a fiduciary investment advisor. The CPA Journal, 72-73.

Kinniry, F. M. Jr., Jaconetti, C. M., DiJoseph, M. A., Walker, D. J., & Quinn, M. C. (2022). Putting a value on your value: Quantifying Vanguard Advisor’s Alpha. Vanguard Research.

Maymin, P. Z., & Fisher, G. S. (2011). Preventing emotional investing: An added value of an investment advisor. The Journal of Wealth Management, 13(4), 34-43. https://doi.org/10.3905/jwm.2011.13.4.034

Pagliaro, C. A., & Utkus, S. P. (2019).Assessing the value of advice. Vanguard Research.

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A BOOK FOR THE SAVER IN ALL OF US

Becoming a 401(k) Millionaire isn’t your typical retirement guide. With 30 years in finance, Dr. Peter Fisher shares personal insights and real stories to help you plan with confidence.

Learn more

Disclosure: Human Investing is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. This article is provided for informational and educational purposes only and should not be construed as personalized investment advice. The information contained herein is believed to be accurate as of the publication date but is subject to change without notice. Past performance is not indicative of future results. Index performance is shown for illustrative purposes only and does not represent the performance of any specific investment. Investors cannot invest directly in an index, and index returns do not reflect fees, expenses, or taxes. The estimated value added by advisors is based on research and modeling assumptions that may not reflect actual investor experiences. Actual results will vary based on individual circumstances, market conditions, and advisor practices. Investing involves risk, including the potential loss of principal. Readers should consult with a qualified financial advisor to assess their individual circumstances before making any financial decisions.

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A financial plan is a structured approach to managing one’s financial life. It is not merely a spreadsheet or a collection of investment products—it is a comprehensive framework that organizes income, expenses, savings, risk management, taxes, and long-term goals into a cohesive, actionable strategy. When constructed properly, a financial plan enhances decision-making, reduces uncertainty, and improves financial outcomes (Nissenbaum, Raasch, & Ratner, 2004).

Yet if financial planning is so powerful, why do so few follow through?

The answer often lies not in math, but in mindset. Research shows that even financially literate individuals struggle to plan for the future when they lack self-control, future orientation, or supportive social norms (Tomar, Baker, Kumar, & Hoffmann, 2021). A well-designed plan must account not just for assets and liabilities—but for human behavior. That’s why the best financial plans are often paired with an accredited fiduciary advisor, who offers a simple, visual, and tailored approach to help you make decisions.

At its core, a financial plan helps individuals clarify what matters most and align their resources accordingly. Whether navigating early adulthood, managing a growing family, or preparing for retirement, individuals benefit from a written plan that reflects financial priorities and personal values. In my work as a financial advisor and educator, I have seen that the most significant breakthroughs often come not from more money, but from more clarity.

the purpose of a financial plan

The purpose of a financial plan is twofold: to organize current financial resources and to make informed decisions about the future. This may sound straightforward, but the complexity of modern financial life often makes it difficult for individuals to answer even basic questions such as, "Can I afford this?" or "Am I on track?" A financial plan provides a framework to answer these questions thoughtfully and methodically.

More than a static document, a financial plan is a living tool. It should evolve alongside an individual's life stages, economic conditions, and shifting priorities. According to Nissenbaum, Raasch, and Ratner (2004), regularly reviewed and updated plans yield significantly better financial outcomes over time.

It starts with defining your goals

Goal-setting is the anchor of any financial plan. Without clear goals, even the most sophisticated strategies can lose direction. Goals give context to numbers and bring meaning to saving and investing. They can be short-term (saving for a vacation), mid-term (purchasing a home), or long-term (funding retirement or creating a legacy).

One of the most effective frameworks for goal setting is the SMART method—specific, Measurable, Achievable, Relevant, and Time-bound. Goals should inspire and direct behavior. In my experience, clients who articulate their goals clearly are far more likely to follow through on their plans.

components of a comprehensive plan

A thorough financial plan includes several interdependent elements, each of which contributes to the individual's or household's overall financial health. According to Ernst & Young’s Personal Financial Planning Guide (Nissenbaum et al., 2004), the five essential components are:

1. Cash Flow and Budgeting
   Understanding income and expenses is the foundation of any financial plan. A clear cash flow picture allows individuals to make informed decisions about saving, spending, and giving. Budgeting is not about restriction; it is about intentionality. When individuals budget effectively, they begin to control their money rather than letting money control them.

2. Risk Management and Insurance
   Life is unpredictable. A good financial plan includes appropriate insurance coverage to protect against major disruptions—including illness, disability, death, or property loss. While not exciting, insurance serves as a financial firewall. Emergency savings also fall into this category, with most professionals recommending a reserve of 3 to 6 months of essential expenses.

3. Tax Planning
   Tax efficiency is a core pillar of financial planning. Smart planning reduces unnecessary tax burdens and aligns financial decisions with long-term goals. This includes strategic use of tax-advantaged accounts, such as IRAs and 401(k)s, as well as decisions around capital gains, charitable giving, and income timing.

4. Investment Planning
   Investments must serve the plan—not the other way around. A financial plan defines the purpose, time horizon, and risk tolerance for each investment goal. This helps investors avoid emotional decisions and focus on long-term strategies. Diversification, asset allocation, and periodic rebalancing are all part of this disciplined approach.

5. Retirement and Estate Planning
   A financial plan must consider the future. This includes projecting future income needs, optimizing Social Security benefits, managing required minimum distributions (RMDs), and crafting an estate plan that reflects one’s legacy goals. Planning ahead ensures that wealth is transferred intentionally and tax-efficiently.

Building a financial plan: a step-by-step process

While the components of a financial plan are well-established, the process of creating one can be deeply personal. Below is a common approach used by both individuals and professionals:

1. Establish Goals and Priorities
   Start by asking what matters most. What do you want your money to do for you? What are your non-negotiables? Apply the SMART method in making them more attainable. Writing these goals down is a powerful first step.

2. Gather Data
   Collect all relevant financial information, including income, expenses, debts, assets, insurance policies, and legal documents. The accuracy of your plan depends on the quality of your data.

3. Analyze and Diagnose
   Identify gaps, inefficiencies, or risks. This includes assessing debt levels, reviewing savings rates, stress-testing for emergencies, and evaluating investment alignment.

4. Develop Strategies
   Design strategies that address the specific needs uncovered in your analysis. This might include refinancing high-interest debt, increasing retirement contributions, or adjusting your investment allocation.

5. Implement the Plan
   Execution is where many plans fall apart. Automate good behavior when possible—automated savings, investment contributions, and bill payments reduce reliance on willpower.

6. Monitor and Review
   Plans should be reviewed at least annually, and anytime there is a significant life event (e.g., marriage, new job, birth of a child). Adjustments should be proactive, not reactive.

Behavioral considerations in financial planning

Financial planning is as much about psychology as it is about math. Behavioral finance has shown that individuals often act irrationally with money due to cognitive biases, emotional reactions, and social pressures. A written financial plan serves as a behavioral anchor—a tool that reduces the likelihood of impulsive decisions.

Recent research reinforces the role of psychology in retirement financial planning. Tomar, Baker, Kumar, and Hoffmann (2021) identify several psychological determinants that significantly impact whether individuals engage in effective planning. These include future time perspective (the ability to think long-term), self-control, planning attitudes, and financial knowledge. In other words, it is not enough to know what to do; one must also be inclined to do it. Social norms and perceived behavioral control also play an influential role, suggesting that a supportive environment enhances financial planning behavior.

Research has shown that investors with written plans are more likely to stay invested during market volatility, rebalance their portfolios regularly, and avoid the pitfalls of market timing. A plan brings structure, and structure supports discipline.

common mistakes and how to avoid them

Even well-intentioned individuals fall prey to common planning mistakes. These include:

• Neglecting emergency savings

• Underestimating expenses in retirement

• Taking on too much investment risk

• Failing to review insurance coverage

• Overlooking tax implications of financial decisions

• Not discussing financial goals with a spouse or partner

Avoiding these mistakes begins with awareness and regularly revisiting the plan. A good advisor doesn’t just build a plan—they help you adapt it.

the value of working with an advisor

While many individuals can build a basic plan on their own, the guidance of a fiduciary financial advisor can add significant value. Advisors provide objectivity, technical expertise, and behavioral coaching. At Human Investing, we believe our highest calling is to serve as guides—helping clients navigate complexity with wisdom and clarity.

Importantly, not all financial advisors are held to the same standard. A fiduciary advisor is legally obligated to act in your best interest. Yet even among those who use the fiduciary label, fewer than five percent operate without receiving any form of commission (Fisher, 2025). That’s why the true fiduciary standard—free from all commissions—should be the baseline, not the exception.

turn intention into action

A financial plan is not just a document—it’s a decision. It reflects your willingness to take control of your future instead of drifting into it. The most successful outcomes aren’t reserved for the wealthiest or the most analytical—they’re earned by those who start, stay consistent, and make adjustments along the way.

If you’ve made it this far, you already care about your financial future. The next step is simple, but powerful: act. Whether it’s writing down your goals, scheduling time to review your budget, or meeting with a fiduciary advisor, do one thing today that your future self will thank you for.

Your money needs a plan. And now, you have the framework to build one that works.

References
Fisher, P. (2025, February 14). Only 4.92% of advisors are true fiduciaries. Is yours? Human Investing. https://www.humaninvesting.com/450-journal/only-5-percent-of-advisors-are-true-fiduciaries

Nissenbaum, M., Raasch, B. J., & Ratner, C. L. (2004). Ernst & Young's personal financial planning guide. John Wiley & Sons.

Tomar, S., Baker, H. K., Kumar, S., & Hoffmann, A. O. (2021). Psychological determinants of retirement financial planning behavior. Journal of Business Research, 133, 432–449.

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Disclosures: Human Investing is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. This article is provided for informational and educational purposes only and should not be construed as personalized investment advice. The information contained herein is believed to be accurate as of the publication date but is subject to change without notice. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Readers should consult with a qualified financial advisor to assess their individual circumstances before making any financial decisions.

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An Analysis of Investment Advisor Representatives and Bureau of Labor Statistics Data: Determining the Percentage of Financial Advisors Acting as “True Fiduciaries”

In the financial services industry, the concept of acting as a fiduciary—putting the client’s best interests ahead of all else—has become a litmus test for ethical practice. However, determining how many financial professionals truly operate under a fee-only fiduciary model reveals a significant gap between perception and reality.

Industry Snapshot: Financial Professionals in the U.S.

According to the Bureau of Labor Statistics (2023), the financial services landscape in the United States includes:

• 513,000 financial services sales agents, encompassing roles such as stockbrokers and commodities traders.

• 321,000 personal financial advisors, offering financial planning and investment guidance to individuals.

Together, these figures total 834,000 professionals engaged in roles that directly or indirectly affect individuals' financial outcomes.

Investment Advisor Representatives: A Subset

Among these professionals, 77,468 individuals are registered as Investment Advisor Representatives (IARs), according to the Financial Industry Regulatory Authority (FINRA, 2022). IARs are often seen as closer to the fiduciary standard due to their regulatory obligations. However, even within this group, a significant portion still earns commissions.

• A recent analysis by Welsh (2024) indicates that 47% of IARs receive commissions, leaving only 53% as truly fee-only fiduciaries.

• Applying this percentage, the total number of fee-only IARs is approximately 41,958 individuals.

The True Percentage of Fee-Only Fiduciaries

To contextualize this figure, let’s consider the broader pool of financial professionals (advisors and brokers). Dividing the number of fee-only IARs (41,958) by the total number of financial professionals (834,800) yields a striking conclusion:

Only 4.92% of financial professionals operate as fee-only fiduciaries.

This percentage has seen growth from an estimated 2% in 2018 (Mantell, 2018), reflecting progress but also underscoring the rarity of this practice in an industry dominated by commission-based models.

References:

Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Securities, Commodities, and Financial Services Sales Agents.

Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Personal Financial Advisors.

Financial Industry Regulatory Authority. (2022). 2022 FINRA industry snapshot. Financial Industry Regulatory Authority.

Mantell, R. (2018, March 19). Is it time to adopt a uniform fee-only standard for financial advice? The Wall Street Journal.

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