The 5 Things That Every Good Financial Advisor Does
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.
Your Investing Experts
Relevant Articles
A Step-by-Step Guide to Personal Financial Planning
Some individuals follow a return-centric approach to investing. They chase returns by selecting mutual funds based on the last one and three-year returns. However, that is not the right approach. The appropriate approach is to identify your financial goals and invest towards fulfilling them. It keeps you focused on your investments for the long term till the goals are achieved. The personal financial planning journey can help you map all your financial goals, invest towards them, and review them till they are achieved. In this article, we will understand what is personal financial planning and how to go about it.
Sectoral/Thematic Funds Have Seen Inflows of Rs. 55,000 Crores in the Last 6 Months: Should You Invest?
As of July 2024, sectoral and thematic mutual funds have seen more than Rs. 55,000 crore inflows in the last six months. The AMCs are on a NFO launching spree and mutual fund investors are lapping these funds. So, what are these sectoral/thematic funds, why are investors pouring so much money into these, and should you invest? Let us discuss.
Emergency Fund: What Is It, Why and How Much of It Should You Have?
In 2023-24, many IT companies and start-ups laid off many employees. The IT companies had to lay off people as the demand or discretionary spending pickup in their major market, i.e. the US, was not as strong as expected. The start-ups had to lay off people as they were not able to raise subsequent round(s) of funding due to the funding winter. In both scenarios, people who lost jobs were left in the lurch. As the IT and start-up sectors were going through a soft patch, it was difficult for these people to either get new jobs or at the same/better pay package.