Whether you are an experienced investor or just starting to map out your financial goals, a financial professional (an independent financial adviser) will prove to be worth the time, trouble and money in most cases.
The Benefits
Comfort: Some people like to travel the riskier path. In financial terms, this generally makes for potentially higher highs but also lower lows. Others select a more predictable path and look for consistency to help meet their goals. No matter what your preference, a financial professional can create an investment plan designed to fit your comfort (risk) level and personal situation.
Problem solving: Most people encounter a little rocky terrain at some point in their life. Whether it is help with estate or tax planning, or assistance to maximise savings, it is good to know you can rely on a professional to give you the advice you need to help preserve your financial peace of mind.
Risk control: A good financial professional knows that returns can be maximised and risk can be managed through appropriate asset allocation. Diversification is the most widely accepted method of helping to reduce overall portfolio risk. Your financial professional can explain more about the benefits of multiple levels of diversification.
By investigating a client’s needs, tendencies and investing experience, a financial professional can craft an investment policy statement that mutually defines risk parameters as they relate to expected returns across an appropriately diverse collection of assets. Selecting investments can then be done in the context of finding those that complement each other.
Realistic performance goals: In most cases, consistent, above-average returns is a goal that many people use to meet their long-term investment strategies. Your adviser can talk in real terms about the returns needed to meet your goals. Often, investors find they do not need to aim for the highest returns, thus avoiding taking on a lot of additional risk.
Keeping your emotions in check: A financial professional will help you resist the temptation to change your investment approach, based on an emotional response to short-term market changes. Research on investor behaviour indicates that new money often flows into specific stocks or funds just after a period of exceptional performance and that those investors typically end up disappointed or even lose money.
The problem is timing. Stocks and funds with sizzling results catch the media’s attention, and many investors get caught up in the hype and rush in with their money. Unfortunately, these followers of the “flavour of the moment” generally end up as the losers.
The Process
Your financial professional can combine seasoned investment expertise, with an understanding of your goals and risk level, to blend a custom portfolio designed to meet your long-term needs. If required, they can accompany you throughout life’s financial journey.
Mapping your trip: It’s hard to reach your destination, if you don’t know exactly where it is you want to go. Together with your financial adviser, you can plan your strategy before you set out.
If you are already investing but not following any specific plan, a financial professional can help you develop a strategy to align your efforts with your current needs and the financial future you desire.
Or perhaps you have spent a lot of time mapping out your financial future. If you are a knowledgeable investor and enjoy watching the financial markets, seeking the advice of a trusted professional is one of the most efficient ways to enhance your knowledge and help ensure your actions align with your goals.
Your financial adviser MUST acquire all of the information he needs to be able to set down in writing exactly what he believes will meet your requirements, and if he does not do this then find an adviser who does!
Monitoring your progress: To keep on track, you need to periodically check your map. Working with a financial professional can help you stay focused and heading in the right direction.
Assessing your situation: Even when the most meticulous plans are made circumstances can intervene and plans must be modified. For example, if your personal situation unexpectedly changes or if economic fluctuations have affected your asset allocation, your financial professional can make necessary adjustments.
With access to in-depth research and sophisticated investment tools, a financial professional can help diversify your portfolio in a manner consistent with your financial goals. He or she can monitor the impact of market activity on your portfolio and suggest amending your asset allocation if it becomes necessary.
The Guiding Influence
of a Professional –
A holistic approach
In a complex investment environment, many investors look for more than advice on where to invest. The role of many financial professionals has broadened from a portfolio growth quest to a way of preservation and guidance.
Emphasis has been shifting from investment performance alone to protecting assets and distributing them over the lifetimes of the individuals involved, and their heirs. A new category of financial advisers – wealth managers, has arisen.
Wealth managers take a “holistic” planning approach, looking at all aspects of a client’s needs, including financial planning, mitigating tax planning, estate planning, trusts and pensions as well as investments, and possibly also insurance, accountancy, mortgages etc. A wealth manager will help keep your overall financial future, and your dependents’ futures, secure.
The value of a wealth manager is to help clients grow, protect and distribute wealth over their lifetime. Their job is to ensure clients stay on track with their plan – this is how financial goals are met.
Contributed by Bill Blevins
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