If you are wondering whether to do your own finances or instead hire an expert, we offer some recommendations to provide a clearer picture of professional financial advisers, how to choose the right one and when it is high time to change specialists.
Why contact a financial adviser?
A good financial adviser will help you define financial goals in the short and long term. For example, they can specify how much money you will need for retirement in order to maintain your lifestyle.
An adviser can also help with a strategy to achieve your goals. If, say, you are saving for a deposit on your first house, they will suggest a way of using your money so as to achieve the desired amount. They will also recommend possible savings and means of investment with regard to your risk profile and needs. They can help set up an optimal investment approach, which instead of rapid growth (with a higher degree of risk) focuses on satisfactory returns in the longer term, etc.
Financial problems can cause stress even if the burden is not massive. A number of studies suggest that people are more afraid of a lack of control over their finances, not knowing how much they are earning, saving or spending. A qualified expert can relieve you of such stress.
Signs of when to contact another financial specialist
The key to smooth cooperation is absolute trust and transparency. You need to be frank about your vision and current financial situation so the adviser can model advantageous scenarios as accurately as possible. It is also important to evaluate the performance of your investment and check your adviser is living up to their initial promises. If that doesn't happen, you have to part company. Here are a few signals to help you recognise when it is time to quit.
- You are not on course to meet your financial goals. The return on investment usually fluctuates and an adviser cannot influence in advance whether the performance will be as good as predicted. A responsible investor should follow their financial goals and return; an adviser should be able to discuss the situation with you and modify it according to the goals.
- Advising advantageous investments that are inappropriate for your portfolio. Every investment product or financial instrument has a risk profile and the product must correspond to your risk tolerance. The task of a financial adviser is to recommend products that meet these criteria.
- Not reflecting life changes. Most investors tend to remain loyal to their long-term financial adviser. If, however, you are retiring or your financial situation has changed, a financial adviser should be able to modify your strategy accordingly. The best approach is to ask your adviser for recommendations or suggestions and then consult these with a third-party expert.
- Not providing monthly or quarterly reports. Most financial advisers offer clients monthly, quarterly and annual reports. Reports should be detailed, helping you to identify gains or losses and understand how your portfolio is doing. You have the full right to access your online investment portfolio.
- Changing the portfolio without prior notice. It is common practice among financial advisers to balance a portfolio in order to maximise growth or minimise the impact of market volatility, providing you have given them your prior consent. But if you haven't given any such consent and your adviser changed the portfolio anyway, it's time to find a new specialist.
The continuation of the article will offer some recommendations on how to find a financial adviser if your current one does not suit you.
-bb-