If you think the reasons to use a financial planner are solely to beat the market, you’re sorely mistaken. This article provides some reasons to use a financial planner.
Some people sit on the fence about whether they need to engage with a financial planner. There are a number of financial tools to help individuals manage their finances that are readily accessible. There are plenty of free retirement calculators, portfolio analysers and personal finance apps.
For me, personally, that is great and I like to help my clients become more financially educated as they work with me – BUT only if they want to.
The more consumers are educated about personal financial topics, the better off they may be. There is also less chance they’ll be duped by unscrupulous sales pitches.
But, given all this information at your fingertips, are the reasons to use a financial planner worth the cost? Shouldn’t you just try to read as much as you can, do it yourself, and save some money in the process?
Of course this fundamentally depends on your time, capabilities, desire and the difficulties. Personally my electrical capabilities stretch to changing a light bulb, changing fuses on appliances and using the numerous remote controls but there is no way I would attempt to rewire a whole house.
Information can empower us to make educated decisions, but it can also overwhelm us, causing “analysis paralysis”. In the UK you have Individual Savings Account (ISA) which most residents will know. There is also the LISA, Cash ISA, stocks and shares ISA, help to buy ISA, Junior ISA and so on. One of the reasons to use a financial planner is that they already know the specific information and they should be keeping up with Continuous Professional Development (CPD). CPD is designed for advisors to stay on top of law changes, new product launches, tax amendments and so on.
It is wonderful that so much specific financial information is readily available. The bad news is that having information doesn’t always equal understanding. Information is a good thing if it gets us to thoroughly think through a decision, but if it causes us to procrastinate indefinitely for fear of making the wrong decision, then what is accomplished?
There are over 10,000 mutual funds and ETF to choose from. A DIY investor may find choosing a fund from this vast universe is like going to the shops and seeing 40 different brands of cheese. It takes time, and ultimately you may just settle on one with packaging that catches your eye. Is that the best way to invest?
If you have the time to disseminate the information and enjoy picking out funds, that’s one thing, but if you don’t — that’s another reason to use a financial planner. Professional financial planning firms like Aisa usually have lists of qualifying criteria before a fund will be included. Our investment team has a 100 page Governance Document, available for clients to view, that shows how the various criteria that we employ before even considering a fund for client selection in our portfolios.
Time waits for no one
If we wanted to we could all cook all our meals at home from scratch, buy a bunch of manuals and learn to do our own car services. Maybe do our own gardening. But we all have different priorities.
Who really has the time? Not to mention: Where is your time best spent? I have clients that have no desire to spend time learning or worrying about their finances – That’s my job! The advisory staff at Aisa Group have spent many hours studying for those professional qualifications that we are required to have, combined with years of experience and updating oneself with continuous professional development. We are efficient with the time, helping you not to waste yours. We all lead busy lives – those here that are at work, or those who are retired.
People often want to be busy in retirement – playing golf, sailing, bridge – walking groups. I would normally say travelling the world but 2020 has put the stopper on that.
I have some clients who are widows or widowers and their spouse took charge of the finances. Now they have no desire to spend time learning or worrying about their finances at their time of life – That’s my job. We can simply hold their hand, listening, guiding and planning with them. Helping them save time and money – at least 2% per annum – please refer to last month’s article for more on this topic.
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Preparing for the unexpected
There’s a reason a GP may refer you to a gastroenterologist if you have an acute pain in your abdomen. The specialist has a particular expertise that you need. The same goes for financial planners who work in a special niche. One of my UK based colleagues specialises in later life work – long term care costs, allowances etc. Another won Inheritance Tax planner of the year in 2018. For me it is generally about pre and post retirement planning, ensuring that a client can have confidence in the lifestyle that they have now or confidence in achieving their goals. Aisa Group can cover a lot of areas for their Cyprus based clients.
Managing your own money has its advantages and disadvantages. One of those disadvantages is that each of us has our own personal biases, and you need to be aware that yours exist. A DIY investor needs to reflect on how much they impact their decisions. A good quality planner can you help you recognise biases you may be overlooking.
You might make rash emotional decisions, too. It’s a known phenomenon that as humans we feel the sting of losing money more sharply than we enjoy the euphoria of making money. Some investors can’t stomach the ups and downs of the stock market. Part of what a financial planner does is to hold your hand through those tough times in the market. We help you make logical and rational decisions, rather than hitting the panic button.
If you are confident if all financial aspects, whether it is investing, pensions, saving, retirement planning, inheritance tax, cash flow planning etc then please continue. But if you do need to chat about any of those aspects or anything else in the financial services world then please do not hesitate to contact us. Our contact number is at the top of the page.
So yes – engage with a qualified and licenced firm, such as Aisa Group.
There are many more reasons to use a financial planner beyond the space constraints of this article. For some further suggested reading please click on our 10 Golden Rules For Expat Investment Article. Part of a financial planner’s job is to help you sort through a variety of information sources. We help you tune out the noise and make the best decision for you based on your finances and your personal goals.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written. So, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was published on 10th January 2021.
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