The Benefits Of Financial Advice
Many of the world's wealthiest individuals use professional planners to help them manage their financial situation. But financial planners are no longer just for the wealthy. Personal finance has also undergone a revolution.
A generation ago, many people had one savings account and a single inflexible home loan. Today, many people juggle bank accounts, credit cards, home and personal loans, investment properties, managed funds and shares. Just as personal finance issues are becoming relevant to more and more of us, the choice of financial products is growing more complex and difficult to manoeuvre around.
Many of us do not have the time to do all the research, examine all the fine print and select from the myriad of available options. That why more and more people are discovering that the advice of a financial expert is now far from being only for the wealthy. It has in a sense become now in fact necessary.
Professional advice is essential when you are contemplating your children's education or your family's future; when you're planning to invest or when you are offered a financial choice. And experts are virtually unanimous: if you only see a financial planner once, the most important time of all is to do it when you are approaching retirement. Good advice at these critical times can have a huge impact on you and your family and your future.
But as more people are learning, a good planner can also help you avoid lost opportunities at other milestones in your life such as – when you get a pay rise, when you build some equity in your house or when you find yourself with a lump sum in the bank.
These opportunities can be lost if you are unaware and ignorant - and that can be expensive. You may wonder how do financial planners decide where you should put your money? Firstly they go through a process called asset allocation. That's where they decide how to spread your money between shares, property bonds, cash and other asset classes.
In order to get to a position of determining how your money should be allocated a good planner will start by taking time to build a complete picture of your financial position. They will start with your income and your financial and life responsibilities both current and upcoming. Next, your assets and debts and any social security entitlements will be close to completing the picture of your financial situation.
Planners will also help you clarify your aims for the future. Understanding where you are and where you want to be means that they can work out and develop a strategy for you to get there. The strategy that they design will take account of your risk tolerance, your investment experience and your lifestyle. It will be a plan custom made for you, which is able to change as you do.
* Original article revised and edited by Tanya Frazer