When it comes to managing your money, trying to build wealth, securing your future, and, above all else, drawing up an effective plan for fulfilling your investment objectives, it can be well worth hiring a financial advisor.
For a select few ultra-wealthy people who have what it takes to manage their money themselves, there may be no need but for most people, especially if they are already busy with careers, having a financial advisor can bring a wealth of benefits.
But with so much to learn about financial advisory services, and trying to make sure you avoid damaging decisions are the benefits of a financial advisor really so great? To help you answer that question with the minimum of fuss, here are the top 5 benefits of a financial advisor, in no particular order.
Perhaps the single biggest cause of mistakes that can reduce the performance of your investment portfolio, or even wipe it out, is the lack of objectivity. Investment decisions driven by emotion, especially feelings of worry or panic, can undo months or even years of hard work.
For professional traders in the markets, working hard to maintain an objective view and execute trades based on emotion-free analysis and decision making is key, and things are no different when it comes to your own investments.
A professional financial advisor helps to provide that objectivity. They can help you ensure you are informed, provide any necessary advice, work with you to establish positive, objective investment decisions, or even undertake investment decisions on your behalf, without the risk of emotion. This can be particularly important when the economy or markets look a bit shaky. After all, picking the right investment vehicle is important but timing your entry and exit is just as important.
A financial advisor who is a full-time professional will offer you a wealth of training, knowledge, qualifications and experience that is difficult or impossible to achieve yourself. It’s always good to take the effort to ensure you are as informed as possible but for a financial advisor, that is their job.
Their training starts with a suitable university degree. They will have been through many industry training programs and qualifications. They maintain their competency and currency by keeping up with the latest developments in the markets, investment opportunities, taxation, and law.
On top of that, a financial advisor will have years or even decades of experience working with and for other professionals in the world of investment and financial management. A good financial advisor is one that comes recommended by word of mouth. That experience and referral is often hard-won and it can be impossible to place a value on it.
There is little point in putting your money into an investment, only to find that the vagaries of taxation mean another opportunity that had looked less attractive would have been more effective. In other cases, taxation can erode the gains generated by an investment. Sometimes, if you’re not careful, an investment that looked perfect can result in a tax charge that hurts your overall personal income, sometimes arriving at exactly the wrong moment.
A financial advisor can take care of exactly these concerns, ensuring that all possible tax implications have been considered before going ahead with an investment. They can also help to keep aware of ways to reduce your overall tax burden, advising you of the latest relevant changes to legislation or the launches of new investments that offer long-term gains, as well as tax efficiency.
A financial advisor spends much of his or her time on research. When considering your particular investment needs, they will research the best opportunities. If they don’t already have the answers to any questions you may have immediately to hand, they will establish the right answers.
More generally, a financial advisor will undertake research on a regular basis in order to ensure they maximize their knowledge of the industry, markets, law and taxation — so you don’t have to. They will often be assisted by other advisors, analysts, and industry experts, all helping to bolster the advisor’s own research.
Perhaps one benefit, more so than any other, is provided by a financial advisor: the chance for relaxation. Having found the right financial advisor, you can properly relax, safe in the knowledge that an investment professional is taking care of a wide range of challenges and questions that you would otherwise have to deal with.
You have more time for yourself because you don’t have to keep tabs on the market so closely. The investment advisor does that job and will contact if there is anything you need to discuss. And if you do have any questions or concerns, you know you can easily contact the financial advisor, to get answers in a timely manner.