Why do we need a financial advisor and the long term benefits of having one

Whenever you ask people if they need a financial advisor, they tend to respond by saying they don’t feel the need for one. The vast majority will deny needing a financial advisor, while others will even add that they are unfamiliar with the term. So, let’s start with who is a financial advisor.

To answer in simple terms, anyone who knows finance and can guide you through your financial journey is a financial advisor. They can guide you on various financial aspects such as when to invest, which investments are most likely to be profitable, their review of various investment products, and many more. Financial advisors can also help you establish your investment plan, especially to achieve long-term goals.

A financial advisor can help with finances for everyday people, investors, business owners, and entrepreneurs. A financial advisor specializes in the field of finance and investments. They provide financial knowledge and advice to clients based on their expertise in this area and according to client requirements.

While the benefits of having a financial advisor are many, some stand out. Let’s discuss the main benefits of leveraging the expertise of a financial advisor.

  • Financial Expertise – A financial advisor has expertise in the field of finance and is therefore perfectly equipped to answer all your financial questions. Depending on your needs, they can advise you on your investments and finances. A financial advisor can also help you make sound financial decisions, which will help you save more and invest properly, among many other benefits.
  • An advantageous financial plan – A financial investor can plan a better and more beneficial financial plan that can enable you to achieve your financial goals. They understand your future needs and goals and design a financial plan accordingly. People often don’t plan their financial future well in advance, leading to problems after retirement. A financial plan is an essential tool to avoid such situations. And no one can create a better plan than a financial advisor.
  • Set SMART goals – SMART stands for Specific, Measurable, Achievable, Realistic and Time-bound. A financial goal, for example, must be SMART to serve the best returns. People who make financial plans on their own often fail to consider one factor or another, with the plan either lacking a realistic approach or not properly taking into account the adequate time factor. Sometimes they lack proper research and knowledge before investing which leads to an undesirable financial outcome for them. Therefore, following the advice of a financial advisor, who has the appropriate knowledge and expertise in finance, markets and investing, while planning any financial goals can enable you to generate better returns and financial gains in the future.
  • Managing your portfolio – Building the right portfolio, monitoring it from time to time and reviewing it regularly is not every investor’s cup of tea. This is where a financial advisor comes in, helping you manage your portfolio. Their market and financial expertise helps you build a solid investment portfolio. A financial advisor analyzes your income, your future goals, your goal and the current market. As a result, they help you choose the right investment options and products based on your risk and return requirements. After making these investments, they help you monitor the performance of your investment portfolio. Their understanding of the market proves beneficial in such cases. For example, whenever you see a doctor for your health concerns, you tend to prefer going to a specialist to guide you on the road to recovery; similarly, a financial advisor is a specialist whose advice you can seek to manage the health of your investment portfolio and achieve your long-term financial goals.

Now you can consider getting financial advice once. But let me tell you, ad hoc advice often doesn’t provide the financial benefit you need. Strategically planning a financial journey is the solid first step towards achieving your goals. In addition, people also fail to monitor, review and make necessary changes to their financial plans based on changing situations. So, having frequent counseling sessions with an advisor can help more significantly in the long run, as they can not only develop a cohesive investment strategy, but also provide the right support in tracking your financial goals.

If you own a business or have unmanageable expenses, hiring a financial advisor can help you with your finances. Although it may seem like an extra cost initially, the long-term benefits of having a financial advisor cannot be compromised as it can turn out to be a cost-effective financial journey after a while. So, have a chat with your financial advisor and follow their advice as this will surely minimize your risk and produce long-term results, while saving your time and money in a more organized way.

To conclude, I believe that in many ways the work of financial advisors is linked to the upliftment of society as they fulfill the dual role of providing financial knowledge to ordinary citizens and welcoming them on the path to financial independence.

Opinions are personal: the author, Hemant K Midda is the director of My planner of Jalandhar

Warning: The opinions expressed are those of the author and are personal. TAMPL may or may not subscribe to the same. The opinions expressed in this article/video in no way attempt to predict or time the markets. The opinions expressed are for informational purposes only and do not constitute investment, legal or tax advice. Any action taken by you based on the information contained herein is your sole responsibility and Tata Asset Management will not be liable in any way for the consequences of any such action taken by you.

Investments in mutual funds are subject to market risk, read all plan documents carefully.


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