If you have questions about saving money, investing, retirement planning, taxes, risk reduction, insurance, or just need some help getting your finances in order, a financial advisor may be able to help.
On the other hand, you may be just fine managing your own money and investments for a long time.
If, however, you have more than a certain amount, lets say tens of lacs or more in investments (and certainly more than Rs 1 Crore), it’s probably time to get an advisor.
Even if you know a ton about investing or even if you’re an investment professional yourself, at times, an advisor may be engaged to get an outside, unemotional opinion about your financial choices.
Financial advisorshelp clients reach financial goals by recommending how to allocate and invest the client’s money. For many, those goals include a comfortable retirement and perhaps education funds for children, but goals might also be pursuing a second career, buying a vacation home, or starting a business.
Although every financial advisor performs similar work, there are big differences among the services provided by different types of advisor and how these services are priced.
People generally confuse what a Wealth advisor / manager does with mere investment management.
There is a complete disconnect with what the public understands between wealth management and investment management.
Individuals can definitely go out and buy some no-load mutual funds and probably do as well as most professionals.
Wealth managementis not only about picking investments and making sure the allocation is consistent with time horizons.
Monitoring to make sure the management stays intact. If it changes, to make changes in who you choose based on your life cycle.
Also, determining what the allocation should be.
The Investment manageris more or less confined to picking the best stocks, bonds, exchange-traded funds, mutual funds and the like for clients. But that is only one part of a wealth manager/ Advisors Job .
A Wealth Advisoractually starts with Investment ideas & avenues.
What are some of the responsibilities wealth managers take on, in addition to trying to find good investments for clients?
1. Financial Planning
For starters, wealth managers are actively involved in their client’s Financial planning & may involve the following steps :
a)It starts with setting of financial goals like Retirement Planning, Children Education & Marriage, Purchase of House & other Assets etc
b)Doing a Client Risk Profile & assessment
c)Review & assessment of Existing Investments
d)Financial Planning & Fund allocation across different Asset Classes
e)Choosing & Recommending the exact financial products to achieve the financial goals.
2. Review of Investment
Most Investors do a lot of study at the time of Purchase or making the investment & then forget about the same. Over a period, most investments loose their sheen & may not continue to outperform as earlier.
a)A good wealth advisor will sit with the client and do a periodic review of the investments made & the performance of those investments vis- a-vis benchmark & peers.
b)Based on the market conditions, The advisor shall recommend readjustment of asset allocation in different asset classes so as to minimize risks & optimize returns.
c)The next level of review is against the Financial goals of the Investor.
How are the investments faring vis- a- vis the financial goals & post review, a suitable decision regarding the asset allocation & readjustment will be taken.
d)The next review is based on the Current financial situation of the investor. As we grow older, based on the life cycle, the risk profile, Financial capability, Needs & Financial Goals of the investors change.
A good advisor will take all this into consideration & among other things, update and change the client’s investment profile, the asset allocation & financial allocation.
3) Tax Planning & Optimization :
Taxes can erode a major portion of corpus or gains from the corpus.
Efficient Tax planning & optimization is a major part of the Advisor’s role.
Different tax saving instruments offer varying returns and lock-in of funds thereby also affecting the Opportunity cost of various financial instruments.
Financial Advisor ensures that the returns are maximised and there is no major lock in of funds due to investments in tax saving instruments.
4) Insurance
Insurance is an important part of a financial plan and it can be helpful to your family’s future.
Deciding the right insurance cover, the exact amount of cover required & the right insurance product for Life Insurance, Health Insurance & insurance of assets is an integral part of the financial plan & the role of a wealth advisor
5) Estate Planning
Estate planning is the process of legally structuring the future disposition of current and projected assets.
Many people think they don't need to do any sort of estate planning, and they think that the existence of a simple Will does the job. However, wills are simply legal documents that express the decedent’s intentions to whom he or she wishes to pass wealth and property (the estate) when he or she dies.
Without an appropriate estate plan, friends and relatives can spend a lifetime (and their life savings) battling over your assets. It can be intimidating, but it is a necessary step in ensuring your assets end up where you want them, without the interference of the tax authorities or third parties.
A professional advisor helps to make it possible for the client to achieve a desired agenda and be tax efficient at the same time. The advisor shall assist you in making a proper financial and Estate plan to ensure the above.
With the deluge of information and recommendations now available at the press of a button, the strong regulatory framework and the digitization of the entire investment process, it has become very easy to make investment decisions & start the process. The need for Professional management input has become increasingly questionable but as is clear from the above, it shall be foolhardy not to seek an impartial view of your investments and the best way forward.
A good wealth manager performs the role of “Investor Manager”more than Investment managerbecause it is more important to manage thehuman biases and the emotions of Fear, Greed and Regret to maximize returns.
As in other areas, the process of Real Wealth creationneeds constant nurturing, which can only happen through a process of scientific assessment, constant review & suitable corrective action & that is where the role of a Wealth Advisorcomes in.
Kindly Check out our earlier blog also on the similar subject :
Shall like to end with a famous couplet:
Choose your advisor wisely, consult him today & start your investment journey.
Happy Investing!
Stay Blessed Forever!
Sandeep Sahni
You may contact us at:
· 91-9888220088, 9814112988
· Follow us on:
www.sahayakassociates.in, www.facebook.com/sahayakassociates,www.twitter.com/sahayakassociat,https://www.instagram.com/sahayakassociates/https://sahayakgurukul.blogspot.com
ReplyDeleteNice Article. Thank you for sharing the informative article with us.
This post is helpful to many people. stockinvestor.in is a stock related website which provides all stocks related information like new stocks and shares available in the stock market.
Stock Market
NIFTY