A good financial advisor is like a doctor: you are most likely to need one at some point in your life. However a general impression is that their services are rendered only for the rich and savvy investors. This is sadly not the case. Just as everyone needs a doctor, it is imperative every investor should have an advisor in the background.
These are specialists who deal in managing and investment money to create wealth for their clients. The industry uses all sorts of terms to describe these advisors – financial planner, money manager, wealth manager, retirement planner, and so on. Each advisor has his or her specialization, all relating to investment and management of money for financial goals. These goals could include retirement, saving for children’s education, minimizing your tax burden, giving to charity, budgeting, debt reduction, or generating income. In addition, a financial advisor will guide with regard to the strategies behind these investment decisions.
The question which comes to mind is do you actually need an advisor? A few of us can bravely say that we are on top of things when it comes to tracking the market, updating information about sectors, laws, price movements, efficiently organizing and completing paperwork relating to investment, have a sharp recall of when each investment is due, regular in rejigging portfolio and making new investments. It is time to be honest with ourselves. Not everyone has the time and skill to do these tasks and these are very important tasks that have to happen continuously in order for wealth to grow.
Supposing a new Mutual Fund scheme has been announced in the market. In order to study, understand and analyze the parameters, take the decision, work on the calculations etc.; all of it requires time and keen understanding of finances. Can we all do it every day? Even if it is an existing fund, how do you go about deciding it is fit for you- whose advise will you take? From your banker, your neighbor, a family friend or a professional, who can dedicate full time and attention to the various nuances of investing? And it would be a costly affair to make a mistake on trial basis.
A tailor-made financial plan
Agreed, that there are many media outlets which give us a lot of information like TV channels, blogs, financial websites, magazines and newsletters. Do you as an investor have the time to go through them all and segregate the grains from the chaff? It can be quite confusing. The information will be general and every person is unique and has different priorities. It is important for the investor to always invest according to their financial goals. A financial advisor can design a portfolio to your requirements which is necessary. A generic investment model will not be effective in the long run. He or she can guide you and provide the relevant information regarding an investment which will suit your requirement.
An advisor is best for avoiding mistakes, finding opportunities you are likely to miss and helps manage assets in tax-smart way. He or she will add value and help you stick to your plan during periods of stress or market instability.
Advisor can be your financial friend & confidant
In our country, disclosing financial details is akin to sharing family secrets and sometimes superstitiously, considered as ‘ghar ki lakshmi’ is being asked to leave. Financial information is not a secret; everyone from RBI to CBI can access it if required. Secondly, there is no actual handing over of assets to a third party. The investment decision and control is always with the investor. The financial advisor is just the facilitator and guide. At time you can delegate the activities, but the ultimate decision is always yours to make.
What to look for in a financial advisor?
If you are convinced that it is better to go with a financial advisor keep in mind a few things. It is wise to seek out the advisor’s credentials before hiring. In India, Certified Financial Planner (CFP) certification is awarded by Financial Planning Standards Board (FPSB), which is the principal licensing body.
Additional qualifications and experience is the key to choosing the best one for you. Each advisor has a specialty and expertise. It is important to find the right fit for your portfolio and requirements. It would be beneficial if you could take a reference of someone who is currently using the select advisor’s services. Client feedback and track record of service and delivery will give you confidence to take a decision.
It is better to meet your advisor and discuss various aspects including service costs, your financial goals, and your present portfolio status and handling service issues. Financial advisors are your safety net and will stop you from diverting attention from the preset goals and venturing into risk assets. They are also a one-stop-shop for all your other needs as well. Nowadays advisors also undertake to assist you in taxation, insurance, loans etc. Some get so well acquainted with their clients and their families, their advice is sought on almost anything.
Advisors are sometimes partnered with fund houses and third party firms. In fact, nowadays a lot of advisors are partnered with online channel platforms like Edelweiss Partners, which offers both the advisors and end users with all facilities and product, access under one roof. From Mutual funds, to loans, corporate FDs, public issues etc. are all handled by financial advisors. And there is an additional comfort when the advisor is tied up with reputed firms like Edelweiss Partners because of the benefit of streamlined transactions, better analytical support and smooth back office operations.
A financial advisor is required in today’s scenario where multiple changes are occurring in different asset classes. It may not be feasible to have the time to collect all the information nor the wherewithal to execute and stay on top of all the paperwork. It is crucial to spend your time and skills in things where you excel and leave the experts to make money for you. So go ahead and make an appointment with a financial advisor today and make a friend for life!