It is funny to think that in a world driven by money, no one is coached on how to manage money in school. But if you identify as someone with a passion for living a great life, you might opt for professional advice on how to manage money.
Even so, Financial Advisors are not only about money management, they provide services to help you live a comfortable life-
- Plan: Everyone has goals in life and an advisor can help you identify those goals, work with you to model and quantify a realistic step-wise plan to get there, provide alternative routes and inform you of the merits of each path.
These goals are usually retirement funds, housing, children’s education, emergency funds, vacations, charity and more.
A financial advisor will help you holistically manage and prioritize financial actions, keeping in view everything from your bank statement and sources of income to what you personally value more in life.
- Implement: After solidifying your goals and views, the advisor will help you actually implement these in an optimal manner. It happens all too often, that during the planning process, investors would not take into account the nitty-gritty of the financial system, like tax systems, market changes, adjustments to the portfolio over time, and costly transactions during the implementation of their plan.
You need to be involved in the system, or at the very least be in the know of every step of every process of the system to really be able to formulate a working plan for your goals. Or you can hire a financial advisor.
- Manage: Perhaps one of the most important advantages of hiring a financial planner is becoming a disciplined investor without having to put in the discipline yourself. All and any investment is useless or at best, a shot in the dark without discipline.
This includes regular check-ins with readable reports and thus managing your current portfolio, portfolio reviews, and proper process for on-going planning and updating that plan.
An example where this is instrumental is perhaps tax-planning. Both market movement and financial policies create new opportunities and disadvantages on investing and withdrawing money via certain processes or at certain times. This translates to how, when and how much of your savings would you withdraw over time to minimize unnecessary losses, and further optimally use the residual amount of perhaps compound over time.
Markets are volatile and timing the markets or otherwise being efficiently responsive to market changes is something most investors stay away from, for their best. Even though this saves a lot of time, energy and effort, it also means losing out on relatively easy to obtain gains. Financial advice is not only for people with large wealth, but anyone looking to live their lives in a financially sound manner, always confidently striving to achieve their goals, financial or otherwise.