Thinking of purchasing a house? Or do you simply need some financial guidance? A financial advisor is usually the best person to assist you. It’s not the first time you’ve heard this; it probably won’t be the last. But, aside from giving financial advice, what do financial advisors actually do to help their clients?
What is a financial advisor?
A financial advisor is a white-collar worker in the finance industry who is devoted to helping individuals better understand their finances, grow their wealth, and manage their financial needs to achieve their goals.
What do financial advisors do?
A financial advisor is an individual who largely focuses on managing and growing your investment portfolio and assets. They may include several insurance policies in their services and assist you in financial planning. Still, in the end, they mainly focus on setting a foundation for long-term financial growth through a retirement plan, insurance, and estate planning.
Do you need to hire a financial advisor?
A common question we often hear people ask is, “Do I really need to hire a financial advisor?” While many investment platforms allow you to manage your investments and insurance yourself, this isn’t why you would hire a financial advisor. Here’s a question for you.
Like building a house, building a financial portfolio requires a strong foundation and an expert who knows how to build the right way, how to avoid risks, and essentially produce a positive outcome. Financial advisors are those experts well-accustomed to the current market trends, meaning they’ll recognise which risks are more profitable and worth taking. They’ll also know what insurance to suggest to protect your financial portfolio best and how to chart a course to achieve your financial goals. So, while you don’t need to hire a financial advisor immediately, it would be in your best interest to do so eventually. Get in touch with a financial advisor to learn more about how they can help you plan for your future
How do you know when you need a financial advisor?
Timing is an important consideration to make when it comes to hiring a financial advisor. For instance, when you’ve just left university and are receiving your first salary, you’re likely not considering saving for retirement. You’re probably thinking about what you can buy with your first paycheck, right? In addition to that, you may not have enough to successfully pay for insurance and investments either. We’ve been there. Still, we can’t neglect to mention the benefits of investing early. Investments like a super fund or unit trust work on compounding interest. That means the longer you have money in them, the more interest you incur annually. Say you invest $100 into your retirement fund at an 8% interest rate annually. In the first year, your total will be $1200 with $96 interest made. Next year, this interest will be added to the compounded amount, exponentially increasing the amount the longer the money is invested. This is why starting a retirement fund as early as possible is so important. However, until you’re ready to start these investments or take on insurance contracts, you don’t need to consult a financial advisor.
Choosing the right advisor
When you do decide to hire a financial advisor, here are some tips that should help you choose the right one:
Look for advisors who have good reviews and client feedback
Look for financial advisors who have administrative staff working for them. This simply means that they have more resources at their disposal to facilitate your portfolio well
Consider what services they offer and do your own research into the investments they suggest. In the end, you’re still liable for your investment decisions regardless of the advice they give
Check how they explain financial plans and investment suggestions to you. Do they explicitly outline the risks or omit some of the details? A good financial advisor will always explain all the details and allow you to make the most informed decisions possible
Lastly, ask them about their commission structure and whether certain investments are contractually based. Financial advisors do earn commissions from certain investments and insurance services
Final Thoughts
Financial planning is one of the first steps to developing wealth or simply living comfortably. In most cases, we don’t always know the various methods, insurances, tax loopholes, or investment opportunities to build wealth or achieve our financial goals. That’s where a financial advisor comes in. Financial advisors are big-picture planners, helping you make financial decisions that’ll benefit you in the short and long term.
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