Imagine yourself sitting at the table in your home and looking at mountains of documents. These include tax statements, financial statements, invoices, etc. Your head spins as you attempt to make sense of it all. This is when the financial adviser comes into play, as if he were a superhero with a bag instead of cape – more info.
What Does a Financial Advisor Do? Financial advisors help you to manage your money. Just the beginning. The wear many hats. Think of them as the Swiss Army knife for finance.
Your financial advisor will help with all aspects of your finances, including budgeting and retirement planning. As if they were your personal GPS system, financial advisors help you make sense of the many decisions. If you’re planning to retire or purchasing your first home, these experts can assist.
Imagine building a house from scratch without using blueprints and even the tools you need. Your home would look more like a piece of abstract art rather than one that is functional. It is also a bad idea to manage your finances on your own without professional guidance.
Here are the specifics. The two main types of advisors are fee-based or commission-based. Fee-only advisers are not compensated for products recommended. Commission-based financial advisers are paid for selling products like mutual funds and insurance. Fee-based advisers receive both commissions and fees.
Spending is not always worth it. You get what you spend. While fee-only advisers may initially be more expensive, they can provide objective advice because they are not rewarded for recommending specific products.
Some people question whether money wizards really are needed. Answering this question cannot be answered in black and white. All depends on you. If you’re confident about your current investments, you may not require one.
We all know that most people do not watch CNBC, or read financial news with their morning cereal. A financial advisor is invaluable if you are unsure of terms such as asset allocation or diversification.
A friend of mine told me he hired a financial advisor after receiving money from an aunt. Although the amount wasn’t huge, it was still an impressive sum. He had no idea what to make of it. The only thing he could remember was that he had put his money into a savings account and it made peanuts.
His advisor created a customized investment portfolio for him (whoops!) He helped him build a portfolio of investments that were tailored to meet his specific needs. (Whoops!
We spend time to learn other things, but we don’t take the same time with money. The crickets are singing…
In times of turmoil, the advisor can act as a voice of calm in a chaotic market.
Remember 2008, huh? Yeah… fun times! They offered clients calm, data-driven strategies to avoid making rash decisions based solely on fear.
We must not forget taxes. They are the evil necessary that we detest. The advisors are able to minimize taxes while maximising returns. This is a feat that would be worthy of Cirque du Soleil’s artists.
Even the financially-phobic can feel empowered by financial advice if they are able to break down complex financial issues into simple steps.
Consider calling someone else who is solely focused on making money out of pennies (pun intended) the next time you find yourself drowning under paper.