The 5 Things That Every Good Financial Advisor Does
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A good Financial Advisor does more than just manage your investments—they act as a filter to protect you from poor products, help keep you aligned with your goals, review your portfolio, ensure your risks are covered, and save you from your own emotional investment mistakes. Having a trusted advisor on your side can truly accelerate your journey to financial freedom.
You may very well decide to go it alone and be a DIY investor – but it doesn’t change the fact that an unbiased, knowledgeable Financial Advisor who “knows her stuff” can play an important role in your journey to Financial Freedom. Here are five ways that a good Financial Advisor can add value to your life over the years.
Helps You Sidestep Regrettable Products
The financial markets are replete with value destroying products that are enthusiastically ‘sold’ by agents simply to maximise their own income at your expense. A competent Financial Advisor can play the critical role of acting as a ‘filter’ for these products, by trawling through the fine print on your behalf and giving you the go/ no-go signal after an unbiased evaluation.
Keeps You Aligned To Your Goals
Much like a coach or counsellor, your Financial Advisor can keep you focused on your long-term investment goals – such as a meaty retirement corpus or a great education for your child. This support may prove invaluable in the long run, by helping you ride low income phases without breaking your goal-based investments on a whim.
Reviews Your Portfolio Periodically
Occasionally, market movements as well as life stage developments will throw your portfolio out of sync with your long-term goals. There may sometimes be a case for a tactical rebalancing too, if the expectations from a particular asset class aren’t great. Keeping these in mind, a good Financial Advisor will go back and review your portfolio at periodic intervals to get things back in sync.
Makes Sure That Your Bases Are Covered
A good Financial Advisor understands the importance of covering your risks, especially the two most important ones – the financial risk of the loss of your life on your dependents, and the risks of incurring a hospitalisation-led expense. To that effect, your Advisor can recommend suitable pure risk insurance plans that help you cover all your bases, financially speaking.
Saves You from Yourself!
Much like the competent dietician who builds your willpower to steadfastly resist the chocolate cake that’s starting you in the face, a competent Advisor can save you from your own behavioural pitfalls that arise out of greed and fear! Investment decisions that are taken while emotions run high seldom turn out to be rewarding in the long run, and your Advisor can play a critical role in helping you sidestep these decisions that can create a large ‘behaviour gap’ in your long term returns.
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