There are several options in the market today for individuals looking to manage their finances. Out of all of them, financial advisors offer the most personalized, one on one service, making them a highly preferred option. Yet, many Kenyans shy away from using their services because they are under the false impression that financial advisors are only needed by individuals with lots of money. Furthermore, others believe that they don’t need financial advisors and that they can manage their finances themselves.
The truth is, however, that as long as you have an income and financial goals, you would benefit from financial advisory. The process of managing your money becomes a whole lot easier when you engage a professional whose only job is to give you information to enable you to reach your goals. Below are some of the reasons why everybody needs a financial advisor.
1. Tax advice
Financial advisors are actually very useful in helping you navigate the complexities of paying various taxes. On top of that, they can help you identify tax benefits you are entitled to but may be unaware of, especially if you are an investor. They also advise on the tax implications of some of the bigger financial transactions you will make.
2. Investment advice
One of the most important roles of a financial advisor is to offer you advice on what investments are suitable for you, given your financial profile and goals. They help you understand what your options are, and what actions will help you achieve your goals the fastest. This can range from general advice on which investment model to use, to customized recommendations on specific investments. They will also steer you away from overly-risky or unscrupulous investments, which prey on the inexperienced.
3. Get your financial profile
You may think you have a pretty good idea of your financial state, but an advisor will give you a full, unbiased picture of where you are vis a vis where you want to end up. He or she will help you identify your assets and liabilities, risk appetite, liquidity requirements, and investment or saving needs. Even if you are not planning to invest, this information will be crucial for any future financial planning you undertake.
4. Avoid amateur investment mistakes
Navigating the investments’ space, especially when you are not a financial expert, can be daunting and mistakes are inevitable. Such mistakes can be costly. A financial advisor will steer you clear of them, lending you his or her expertise and industry knowledge. This will preserve your capital and get you that much closer to attaining your investment goals.
Some of the most common first-time mistakes include not doing your due diligence, taking on more risk than you can handle, failing to diversify, and thinking short term, all of which a financial advisor can assist with.
5. Understand and undertake complex transactions
It is recommended that you seek professional advice before undertaking complex, life-changing transactions, for example, buying a home, investing, or choosing a retirement benefits package. These decisions will have far-reaching consequences throughout your life, which is why trusted expert guidance is always a good idea.
In conclusion, getting a financial advisor will expose you to more than just wealth management and investment advice. It will also make a wide array of resources, expertise and experience available to you, allowing you to become fulfilled financially.
What’s the qualification of a good financial advisor? How do I smoke out conmem and scams? How much are their fees?
To find a trustworthy financial advisor, do your due diligence first. Evaluate their performance record and career history. Most good financial advisors have memberships within professional bodies in the financial services sector such as CISI, ICIFA, CFI or affiliated with established firms. They should also be able to give you references from clients served in the past.
Financial Advisory is based on long term relationships and not just transactional sales. Be wary of those in a hurry to close the deal without first understanding your pain points.