What is a financial advisor, and why should you hire one? We’ve often heard people talking about why they don’t need a financial advisor because they can manage their own investments, which is true for the most part. But opening investments isn’t the only reason or value financial advisors offer. No, their value lies in their knowledge and experience in the financial industry. In this article, we’ll explore the value of financial advisors and why you should consider working with one.
What is a financial advisor?
A financial advisor is a qualified professional whose job is to provide professional advice and guidance to individuals on the best and wisest way to manage their money. They often are connected to multiple financial corporations that offer insurance and investment products for clients to purchase in order to assist them in building wealth and protecting their interests.
Why you should hire a financial advisor
So, why should I consider working with a financial advisor? Here are some reasons that may interest you:
For financial security
Apart from helping you build wealth if that’s your goal, financial advisors are well-equipped to help you manage your finances in a way that develops financial security. To be financially secure doesn’t mean that you have millions in the bank. It simply means that if your whole life turned upside down now, you would be fine for a while.
A financial advisor will help you achieve this by taking a constructive look at your current financial status and using it to create a plan to better your financial health, leading us to our next point.
To create an effective financial plan
A financial plan is essential to managing your finances. We’ve heard it once said that you have to set your destination before setting out to reach it. Creating a financial plan is exactly how you do this. There are several components to a financial plan that your financial advisor will walk you through; they are:
- Resource management
- Cash flow management
- Insurance
- Tax planning
- Setting goals
- Retirement planning
- Estate planning
Planning for retirement
Planning for your retirement is one of those things that almost everyone needs to do, but so many fail to do. There are two ways your retirement can go. Either, you would have done the wise thing and started saving from a young age in a Super Fund or another retirement fund. As a result, your savings compounded for roughly 45 years, leaving you with enough to enjoy your retirement and care for your needs.
On the other hand, you could not save at all and end up having to rely on your kids for financial aid in your advanced years. If you asked us, we’d prefer the latter option. Financial advisors are well-equipped to help you plan for retirement. They’ll calculate how much you need to put away and how it’ll grow by the time you’re 65.
To buy or manage property
Buy a house and have a family, isn’t that the dream? While this may have been the dream 50 years ago, buying property is still high on the priority list for many. Whether you want to buy property for an investment or to live in, having a financial advisor help you plan effectively towards purchasing a property is a great way to avoid common pitfalls many homeowners make and essentially make a wiser purchase.
To set and achieve financial goals
When it comes to setting financial goals, it’s normal if you don’t really know where to start, especially if good financial planning or management wasn’t taught or modelled to you from a young age.
A financial advisor will assist you in setting appropriate goals that are realistic and achievable for your current financial situation. They’ll also provide you with practical guidance on how to achieve those goals.
To have objective guidance
When you’ve worked tirelessly hard for your income, it can often feel like you deserve a treat now and then, which is completely understandable. However, we can also make decisions based on our emotions when it comes to finances, which isn’t always great. A financial advisor will help you process big financial decisions with an objective outlook, factoring out emotions and simply looking at the numbers and what will benefit you in the long run.
For navigating tax
Tax comes for us all and can be a thorn in your side if you’re paying more tax unnecessarily. A financial advisor will help you navigate through tax, aiming to keep as much of your income in your pocket as possible by using legal tax rebates provided by the government.
For example, several investments that you can open may be tax deductible. The same goes for certain property expenses, too. Your advisor will help you identify these opportunities and assist you in legally taking advantage of them to save money.
For peace of mind
Finally, when your finances are in order, it offers you and your family peace of mind. Financial stress is often at the centre of most negative situations in a family. When money’s tight, the parents are anxious and fearful, worrying about their financial obligations and looking after their children. As a result, this could develop issues in the marriage or other issues too.
With a financial advisor, your finances might not be in the perfect condition, but at least you know that they’re on the way to getting better. The will allow you to rest easy knowing that somethings being done to sort out your issue.
Final Thoughts
Working with a financial advisor doesn’t mean that you have to take their advice as the only way forward. Your finances are still yours to manage, and you’re still responsible for making the decisions. That said, it’s the financial advisor’s responsibility to put you in a better financial position than you’re in now with the advice they give you. So, consider what they say and factor it into your financial plans.
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