What Is A Financial Advisor?Building Wealth - Who Can Help
Knowing what a financial advisor is instrumental to correctly learn about the advantages and risks of the different investment alternatives.
Sometimes the world of economics and finance is not so simple to understand. Not only must we know what the basic concepts are, but it is necessary to know how they can affect you and how you should act in certain situations. For all this, it is recommended that someone helps us make the right decisions, that person can be a financial advisor.
What Is A Financial Advisor?
A financial advisor helps other people on issues related to the world of economics and finance. They guide you on the financial products that exist and advise you on understanding what is best for you according to the risk you want to take.
Their job is not only to help understand the implications that exist in the world of economics, but usually, an advisor advises other people who are unfamiliar with the knowledge on the subject in-depth, but who know they want to invest your savings and get returns on your money.
In exchange for your teachings and guidance, the financial advisor will obtain a pre-established percentage or commission of what is obtained in a recommended financial transaction.
What Good Is The Help Of A Financial Advisor?
A financial advisor is an ideal person to help you achieve goals in the short, medium and long term. Your job is to find from the wide variety of options that exist in the market, the product, service or investment that best suits your needs or objectives.
The financial advisor should help not only with advice on which are the best investments but should help to establish priorities to achieve financial goals and avoid misuse of financial instruments.
The help of a financial advisor contributes to saving time, money management and the ability to find the shortest and safest paths to achieve the goals established in a financial plan, but it is also invaluable in the optimization of resources and in the possibility of raising profitability and reducing the risk of monetary losses due to poor investment decisions.
Now that you know what a financial advisor is, you can consider approaching one and start investing your money to achieve your financial goals and objectives.
Tips for choosing a Financial Advisor
A good financial advisor will help you wade through the overwhelming choice of investment products on the market and help you to select those best suited to your particular circumstances.
But how do you settle on the right person to guide you? And how do you know that they will be committed to you and focused on meeting your needs? Here are some tips to bear in mind when choosing someone to entrust with your financial affairs.
Choose An Independent Financial Advisor
Banks and building societies usually have “tied” financial advisors – that is, those who can only recommend products from the companies that they represent. By choosing an Independent Financial Advisor (IFA), you will not be restricted to the offerings of one particular organization; an IFA can recommend the products that are most suitable for you, regardless of which company they come from.
Choose A Financial Advisor Who Offers A Full Service
To give you the best possible service, an advisor needs to examine the whole of your financial affairs and take time to understand your requirements and aspirations.
They need to have an accurate idea of your current financial situation and what you hope to achieve by the products that you invest in. They also need to know your short term needs and your long-term aspirations.
It is essential to recognize that financial advice is not a one-off event but an ongoing process. Choose an advisor who will regularly review your financial affairs to see if your needs are being met and propose any changes that may be necessary to achieve your goals.
Choose A Financial Advisor Who Has Relevant Experience
You are likely to get the best advice from someone who is experienced in dealing with people who are in a similar situation to you. Make sure that you choose someone who is used to advising people from your background and outlook.
Choose A Financial Advisor That Other People Are Willing To Recommend
Personal recommendation is the best advert for a good financial advisor. Ask for testimonials from satisfied clients who can vouch for the results they have achieved over some time, say five to ten years, from following the advice they have been given.
Choose A Financial Advisor Whose Costs Are Transparent
Currently, UK financial advisors can be paid in two ways: by taking a commission on the products that they sell or by a direct charge for their services.
Although it might appear at first glance that the first method is preferable, do not make the mistake of thinking that you are not paying for your advice: the commission is included in the ongoing administrative costs that are deducted from your fund or account.
Only when a financial advisor makes a separate charge for their services – as will become the law from 2013 – are they able to offer genuinely independent advice which will not be influenced by the variations in commission payable on different products.