Do you need a financial advisor?
In this article, we will discuss why a financial advisor is needed and what services it provides for individuals.
Why do you need a financial advisor?
A financial advisor helps:
- Set financial goals
- Take control of your cash flow
- Help start investing
- Avoid mistakes in the stock market
- Get your finances in order
What does a financial advisor do?
First, the consultant determines your current financial situation. For this, simple financial statements (income-expenses, assets-liabilities) are compiled, which will give an understanding of the “point A".
Next, together with a consultant, you will formulate financial goals – for example, buying real estate, paying for children’s education, generating passive income, etc.
How to achieve these goals? The answer to this question can be obtained with the help of financial planning. A personal financial plan will allow you to see what are the ways to achieve these goals with the help of current capital, regular savings and investments.
To help you avoid costly mistakes early in your investing journey, a financial advisor will teach you the basics of investment literacy and help you open the right brokerage account for you.
Services of a financial consultant
At a one-time personal finance consultation, you can get an answer to your request. The range of issues and tasks with which it makes sense to contact a consultant is quite wide. For example,
- How to put things in order in finances and keep them competently?
- How much should be invested to achieve a specific goal?
- Is it worth it now to buy real estate in a mortgage or is it better to rent?
- Is it worth taking a car loan or is it better to invest this money?
- Which broker to choose to start in the stock market?
You can discuss the prospects of certain asset classes – stocks, bonds, real estate, etc. Get answers to your questions about personal finance and investments.
Drawing up a personal financial plan (PFP).
A personal financial plan is an effective tool for achieving your financial goals and investing wisely. This is a plan for accumulating and investing funds to achieve your goals. It is recommended to start your journey with financial planning.
Often people, without having formed an investment plan, immediately think about specific investment options. What is the best stock to buy? Will the shares of this company rise? In fact, these questions are meaningless if you have not decided on a more general, strategic picture for yourself.
- Before you choose specific instruments for investing, you need to decide:
- How realistic are my financial goals? How long are they achievable?
- How much should you set aside each month?
- What return can you expect?
- What will I do if the market falls? In case of market growth?
- What kind of passive income should you expect? How can you take care of your pension?
- In other words, you need to determine the overall financial strategy that will allow you to achieve your goals.
For clients who want to develop in the subject of investing, some consultants provide individual investment training. This format implies regular meetings with a discussion of a specific new topic and answers to questions. As a result, you will be guided in the following topics:
- Passive and active investments. Various asset classes and indices.
- Broker choice. Working with the trading terminal.
- Stock. Analysis of financial statements. Cost estimate. Law on Joint Stock Companies.
- Bonds. Classification of bonds and their role in the portfolio.
- Portfolio management. Approaches and principles.
- Workshop. Work with reports, search for investment ideas. Psychological aspects. Taxes.
The list of financial consulting services is not limited to those described above. Clients come with other requests as well. For example,
Second independent opinion. Sometimes it makes sense to get an independent opinion about the product offered to the client – whether it is an investment portfolio, an insurance policy, or any important transaction.
Selection of an insurance policy. First of all, we are talking about life insurance policies, including accumulative (NSZH) and investment (ISZH).
Accompanying the financial plan. This may include monitoring compliance with the financial plan, helping with updating it, maintaining portfolio records, etc.
And other services.
Who Uses a Financial Advisor?
Basically, people with an average (and above) income come to a financial consultant, who have the opportunity to save money and some initial capital. Accordingly, they want to start investing in the stock market, do it right, and they need to be brought up to date.
There are also clients to whom the idea of contacting a consultant comes even in a situation where the initial capital is small and / or the ability to save is small. Even small regular investments can be a good foundation for starting and growing wealth.
In general, these are advanced people who want to take care of their future.