Investment advisors help you achieve the best financial goals. I love Warren Buffett’s famous quote. Buffett says, ‘If you don’t find it to make money while you sleep, you will work until you die’. Of course, if your savings aren’t working when you’re asleep, you have to work to make money until the end. That is the meaning of my statement. If you want to keep your savings working while you are asleep, you need a good investment advisor.
What is a Financial Planner?
An investment broker / agent does not have to be a financial planner. Becoming a financial planner requires education, experience, in-depth knowledge of all types of investment plans and professional values, discipline. Also, decisions have to be made every time in the interest of your customer (in fiduciary capacity). It doesn’t matter if he gets a brokerage or not. SEBI has started registering as a financial planner.
Investment Advisor
The term investment advisor here is in the broadest sense of the word guide. For the sake of this article, I am taking the liberty of including in this definition the guidelines of both “AMFI” Registered Mutual Fund Distributors (MFDs) and SEBI Registered Investment Advisors (RIAs).
Whether to find a financial advisor for investment or to manage your own investment (DIY)?
This question has always been asked over the years nd its answer is an important and far-reaching decision in our financial planning process. Many feel that they do not need the help of financial planners or investment advisors. But deciding whether or not you need an investment advisor is crucial. The right decisions need to be made from time to time to manage your long-term investment. This is not just a one time decision. For this, it is necessary to acquire all the knowledge and skills and keep updating your knowledge accordingly. Let’s put aside the fact that it takes a lot of time to acquire skills.
You can effectively use the time you are going to use to acquire skills to do many things in life. Exercise, go for walks, acquire professional skills. You can use this time to learn a new language. One thing to keep in mind is that time is of the essence and that it is limited. There are many important things that a man or a woman in the family who cares about the needs of busy executives, professionals, working parents and family members should give priority to. Giving time for continuous research on financial issues, constantly evaluating the available options, takes a lot of time to implement the decision. If the decision is wrong again, the financial loss will be different.
Importance of Investment Management
Even if you take the time to do these things, investment management is certainly not of interest to everyone. Many of you may have heard of the management theory of ‘core competency’. The efficiency of each company (or individual) is in performing a specific type of work. We have the ability to use the resources required for that task. It has the overall benefits of business.
For example, a vehicle manufacturer buys spare parts from a specific company. That doesn’t mean the automaker can’t make spare parts. But since the company’s main business is manufacturing vehicles, the company uses its skilled manpower, finances, machinery, etc. to increase engine fuel efficiency, develop new products.
Highlight: Recent research has shown that individuals and organizations who use their abilities to develop their core competencies make rapid progress in their jobs or careers.
Steps for Investment Planning
- Establishing customer-financial relationship, Building trust, Meeting each other’s expectations.
- Gathering information and knowing the goals and desires of the customers. These objectives can be categorized as short term, one to two years, medium term (5 to 10 years) and long term.
- Determining the right goals based on information.
- Creating a plan of action for financial planning.
- Implementing the plan.
- Reviewing investments, plans and objectives every three / six months.
- You need to be aware of the events / changes happening in your client’s life and make changes accordingly.
- Objectives can be classified as individual (i.e., children’s education, new home purchase, vehicle purchase, etc.) or general (i.e., risk planning, retirement planning, tax planning, investment planning, inheritance planning).
Financial Behavior
Many people use ‘Google’ to find the answers to their every question. Another important point is that financial management and its long term planning is a personal matter. The financial behavior of two siblings, two sisters, husband and wife, mother and daughter, father and son is different. If the financial behavior of two people with such a close relationship is not the same, will the financial behavior of the stranger never seen by Google be the same as that of you? Our financial and emotional lives are complex and interconnected. Wrong decisions in financial planning can have serious consequences for other related decisions in your life.
A financial advisor will be able to better manage your savings by combining the financial risk and the opportunities available to you. In general, if your investment is scattered in more than one place, it becomes difficult to know for yourself what stage you are at financially. Without a financial advisor, savings or investments are more likely to be disrupted if they are not motivated by a specific goal / financial objective. Considering why an investment advisor is needed, one can understand the meaning of the promise quoted at the beginning of Buffett’s article.
If you want to increase the efficiency of your savings, you should look for a good financial advisor and guide like a family doctor, then he should look for RIA or MFD. We will learn about the benefits of being an investment guide in the next article.
Note: Investing in mutual funds is subject to market risks. Please study the brochure of the fund before investing.
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