It is quite impossible to add ‘managing Finance’ and ‘walking in the park’ in the same sentence, especially while handling the financial assets of another individual. It takes a lot of effort to zoom out to look at the whole financial map of a person and advise them accordingly. People who define financial planning as something they can easily do on their own usually drown at a later stage.
People had awful experiences as a result of the pandemic, some of them turned out to be life lessons. Businesses suffered a large drop in revenue; working professionals saw their income sources vanish into thin air, and savings only lasted so long. It prompted even small business owners to consider improving their financial management strategies. While some still believe ‘financial advisors are an extravagant expense.’ There is more to such a preconceived notion than meets the eye.
Contrary to popular belief, financial advisors are not some sort of salesmen pressing you to buy insurance plans or unnecessary financial products or services. They operate as anchors, preventing your fort from crumbling due to a single financial misstep.
Determining the role of Financial Advisors
A financial advisor is an expert who helps individuals organize their personal finances. Financial Advisors acts as an umbrella term for all sorts of activities that ultimately aims to assist a person in evaluating their financial health and developing a plan of action to secure their financial status quo.
People have realized the power of investment in a post-pandemic world, but their lack of experience often is a hurdle to making the right call. This is when seeking a financial advisor’s help can guide you on the right path. Now, financial planning experts will not just probe you to buy term insurance or a specific Mutual Fund plan; while it might be one of the ways you can think of investing your money, it is certainly not the only way.
A financial expert’s first step is to meet with the client to assess their income, assets, liabilities, future scope of income, risk capacity, etc., and calculate their net worth. They suggest finding the best investment option or managing it prudently based on their current wealth and probable future income.
If you have debts to pay, your financial advisor will want to know and simultaneously create a plan to become debt free. A person could hire a financial advisory firm for estate planning, developing tax strategies, forging finance for retirement, and more. It is not just restricted to one particular investment idea but more towards keeping the client at the center and working towards their financial goals and financial freedom.
Myth – Financial Advisors take over the Client’s Account
The mistrust people have of financial advisors is seeded in the idea that they would take over the person’s financial account and get them to invest in places that aren’t necessary. The Securities and Exchange Board of India (SEBI) regulates the financial advisory domain to safeguard the interest of investors. Advisors registered with SEBI are bound to conduct themselves as fiduciaries putting the client’s interest ahead of their financial gain. Above all, it is your money, and you would always have the final call on any monetary moves made.
Truth – Clients have ultimate Control over their account
Myth – Hiring Financial Experts for only Investment
On observing a day in the life of a financial advisor, you would see them strategize for client meetings, read their background to prepare relevant questions, look for changing market trends and find the right investment avenues for their clients. Now investment is just one part of the entire picture.
There is more, such as looking at tax returns, finding a person’s potential income from passive income opportunities, creating security using insurance, building a contingency fund, etc. Even more so, one does not always have to get their financial portfolio managed by an advisor. You can seek to take suggestions and implement their advice at your discretion.
Truth – There are myriad activities below the tip of the iceberg of what financial advisors do!
Myth – Hiring a Financial advisor is a costly affair.
A financial advisor does not always charge you on a commission basis; some charge a percentage based on assets under management, while others may have a fixed fee. Money management is not a short-term goal. A financial advisor would conduct meetings and have a moderate check on your portfolio, eliminating any financial risks and assisting you in significant financial decisions. Their research and expertise in reading the market trends favor your financial future.
Truth – Financial Ignorance is a Costlier Affair.
In a Nutshell
Financial advisors act as a guiding light for you when you are unsure of your investment strategy and expected returns. Whether you are an established businessperson with a large estate to manage or simply a busy professional with no time to spare in tracking the markets, they can help you manage your income, set your goals, and achieve them.
The underwater elements seem to remain in the dark because of the unwariness of a financial advisor’s role in helping people tackle their money’s future. Finding the best expert means finding financial peace for an unforeseen future.