So, you have a nice job and are earning a stable income. You have managed your finances so far without the help of a professional financial advisor. You’re in a good place right now and that’s fantastic! However, while it may seem like you are comfortable managing your money by yourself, this might, in fact, be the most suitable time for you to hire a financial advisor.
It is often the people who are doing well for themselves and that are saving comfortably but have no plan on how to stretch those dollars further to secure their financial future, that most often require the services of a financial advisor.
Financial advisors not only assist you in maneuvering through any financial roadblocks that you may encounter, but also lend an ear to listen to your financial troubles, and try to help you resolve them. Let’s look at some of the reasons why you need to hire a financial advisor.
Financial advisors not only assist you in maneuvering through any financial roadblocks that you may encounter, but also lend an ear to listen to your financial troubles, and try to help you resolve them. Let’s look at some of the reasons why you need to hire a financial advisor.
A financial advisor can help you out with the following:
1. Financial Planning
In layman’s terms, financial planning involves coming up with a plan that helps you manage your finances to achieve your financial goals. Financial planning involves saving up, being careful with your spending, investing money, and so on. A financial advisor can help you achieve these goals by advising you on which financial products to invest in, how to curb your spending behavior, etc.
2. Investment Planning
Every investment you make is not the same. To grow your money, you have to ascertain whether a certain investment suits your needs or not. There are different risks involved, with each investment offering differing returns. You need to take into account the risk-reward ratio by evaluating factors such as exit load, taxation, charges, and fees, etc. Herein, a financial advisor would help you understand the pros and cons associated with the investment helping you make investments that best match your needs.
3. Tax Planning
Taxes are a certainty of life. While one cannot avoid taxes, we can certainly minimize how much we end up shelling out through efficient tax planning. With the assistance of your financial advisor, you can arrange your finances in such a way that you make the most of deductions and exemptions available to you to save tax.
4. Retirement Planning
When the time to hang up your boots nears, you want that assurance that money is not going to be a problem for you. For this to happen, you must start preparing for retirement from a young age. Through retirement planning, you can leverage your youth to financially secure your old age by saving up and investing in the most suitable financial products for your needs. Your financial advisor can help smoothen your transition to retirement by identifying the right retirement accounts for building your corpus.
5. Estate Planning
If you’ve been fortunate enough to build a stable and prosperous life for yourself, you’d want the same opportunity for your loved ones to enjoy as well. Through estate planning, you can ensure that they don’t have to face difficulties in their life after you’re gone. You can ensure this by making a list of your assets, your liabilities, setting up a will or a living trust, appointing beneficiaries, and so on. Your financial advisor can also step in and help guide you during the entire estate planning process.
6. Insurance Planning
An insurance plan acts as a safety net for your family ensuring that they’re looked after once you’re gone, while health insurance ensures that you do not lack financial support during medical emergencies. Since it’s a buyer’s market when it comes to choosing insurance policies making it quite a confusing process. A financial advisor can advise you on which insurance policy would best suit your needs and finances so that you do not end up buying insufficient insurance.
7. Debt Management
A popular saying states that ‘interest on debts grows without rain’. The most obvious downside of increasing interest is that your earnings are depleted. Debt management, therefore, becomes integral when it comes to managing your finances. A financial advisor can assist you in creating a debt profile that helps you lower your debt. They can help you curb your spending and avoid debt before it’s too late. .
When is the right time to approach a Financial Advisor?
Let’s look at a few situations wherein you would require the services of a financial advisor:
- Undergoing major changes in your life
- Too busy to handle your finances
- Require a second opinion for your finances
Getting married, having a kid, buying a home - these are major decisions that affect your life. As a result, your financial state undergoes a transformation that requires you to modify your existing plan or devise a new financial plan. These milestones need your attention and time. With the help of a financial advisor, you can ensure that you have someone to guide you in creating a financial plan and that you are on track to achieve your financial goals while absorbing the impact of your lifestyle changes.
Being too preoccupied to plan one’s finances due to lack of time or a tight schedule are common reasons why most people refrain from taking an active interest in financial planning. In such a scenario, a financial advisor can step in and help keep your finances on track. You need to be upfront about the state of your finances and give them accurate numbers when it comes to your income, expenses, assets, liabilities, financial strengths, and weaknesses, etc.
Conversely, you may have ample time to manage your finances but might need a second opinion. In this case, you can reach out to a financial advisor who can offer a different perspective to you. With the added benefit of your advisor’s insight, you can make a decision that best suits your current financial needs.
To summarize
Don’t neglect the importance of professional financial guidance when you’re doing well for yourself financially. Be proactive and take the next step in your financial journey. Furthermore, don’t hesitate to ask for help when trying to figure out where you want to be financially in the near future. A financial advisor can help alleviate your financial worries by offering timely advice and keeping you on track to achieve your financial goals.