Let’s look at the role of a ﬁnancial advisor like the role of a ﬁtness coach. We all understand the importance of being ﬁt and healthy, but we often fall out of our regime due to lack of discipline, paucity of time and unawareness of what to do next. This is where the role of a coach comes in. A coach’s role is to ensure you tirelessly work towards your goal. He keeps an eye on your workout regime, regulates your diet and carefully monitors your progress.
A coach to your money is a ﬁnancial advisor.
Who is a ﬁnancial advisor?
A ﬁnancial advisor is one who provides guidance on how, where and when to invest. The advice they provide could be for a wholesome ﬁnancial plan or individual investments made towards a larger ﬁnancial plan. Financial advisors provide advice starting from choosing the ﬁnancial instrument; deciding how much to invest; how frequently to review, to taking corrective measures if needed.
Why do we need a ﬁnancial advisor?
You might often think that there is plentiful information available on the web about investing – then why would one need a ﬁnancial advisor?
Because a ﬁnancial advisor specialises in providing ﬁnancial advice to customers, based on his expertise and their requirements. While you could be aware of your needs and the way to go about investing for it, you may not always have the time to do it all by yourself. Here is where a ﬁnancial advisor takes the responsibility from you onto him.
Here are some beneﬁts of engaging a ﬁnancial advisor for your investment and ﬁnancial planning needs:
• Understanding your investment needs and chalking out a ﬁnancial plan:
One of the very ﬁrst steps while chalking out a ﬁnancial plan is to understand the need and purpose. Your ﬁnancial advisor understands from you, your needs and future goals and accordingly draws a long-term plan to fulﬁl it.
• Financial expertise:
A ﬁnancial advisor brings with him/her, expertise about the ﬁnancial markets. They undergo several trainings and carry certiﬁcations to secure the title of a ﬁnancial advisor or an investment advisor. And thus, engaging a ﬁnancial advisor to help with building a portfolio, chalk out your goals and help track it, could be a good idea.
• Laying down SMART goals:
Goals need to be SMART – Speciﬁc, Measurable, Achievable, Realistic and Time-bound. Even in your ﬁnancial plan, you have to chalk out goals that are achievable keeping in mind factors such as your income, expectation of return and goals. And a ﬁnancial advisor would help you do this.
• Helping you choose the ideal path to being ﬁnancially ﬁt:
Once you decide what your goals are, your ﬁnancial advisor would help you choose speciﬁc investment options to achieve it. Your advisor would help you choose the appropriate ﬁnancial instrument basis your risk-return requirement and match it with the appropriate ﬁnancial instrument.
• Regularly monitoring your portfolio:
A ﬁnancial advisor helps you monitor and reassess the investment performance as you may not always have the time to do it. Regular monitoring of your investment portfolio is necessary to ensure alignment of your investments with your ﬁnancial goal.
• Revising portfolio from time to time:
An investment portfolio needs review and reallocations depending on the market situation and changing needs. In such situations, an advisor would suggest revisions on the basis of his expertise and market situations.
The role of a ﬁtness coach is similar to the role of a ﬁnancial advisor – both carry expertise, both ensure a sound ﬁtness plan – whether physical of ﬁnancial and both help in monitoring and ensuring the effective progress of the plan during the long term.