FINANCIAL ADVISERS BRING A LOT TO THE TABLE
A
person suffering from an ailment or involved in a legal wrangle seek a doctor
or a lawyer for professional help. However, if he must invest his hard-earned
money then he will shy away from seeking a financial adviser. A financial
advisor is a professional who provides financial guidance to clients based on
their needs and goals and helps manage their money including investments and
other accounts. There are two types of advisers: Fiduciaries are the ones who
charge a fee for their advice and holds assets in trust for a client; the
others are distributors who earn commissions from the products they sell to
their clients. Then there are financial planners who are professionals helping
companies and individuals create a program to meet long-term financial goals. Mutual fund company in Jaipur, In India, due to the
proliferation of the financial industry, the same entity performs the dual task
of planning and advising the clients. Financial advisors choose investments for
a client by assessing the investor’s tolerance of and capacity for risk. Often,
a person seeks a financial advisor after suffering a loss of investment, or due
to a windfall of capital, or for his need to save for retirement. As per the
third CFA institute investor trust study report, 70% of Indian investors hire
professional advisers vis-à-vis 54% globally.
Why
does one require a financial advisor in today’s
digital world? After all, so much information is freely available on the net
and number offer-based Robo-advisory services have also sprung up in the
market. Nevertheless, self-investing is as harmful to your financial
well-being, as for the health of the people indulging in self-medication after
researching on the internet. Although there is a lot of data and information
available in the public domain but is it enough for the investor to take
prudent financial decisions? Data available on the internet is raw, unorganized
facts. When somebody processes, organizes, structures, or presents this data
with reference to a context, it becomes information. Both data and information
are freely available and easily accessible on the internet. However, the retail
investor lacks the experience and insight to combine with this information,
which we term as knowledge. When the individual applies this knowledge to
discern and makes good judgments about what is the right thing to do in a
situation, he has then gained financial wisdom. The ancient Greeks called this
‘practical wisdom’ as Phronesis.
Recently,
I read an article by Radhika Gupta, CEO Edelweiss Asset Management Limited,
where she imaginatively coined an acronym PEACE. She discusses that the
financial adviser brings peace and comfort to the client. The acronym PEACE per
se had the following important elements:
Trust
and service are the two most important facets of any adviser-client
relationship. It takes time for an adviser to reach the stage where his client
starts trusting him. To do this, the adviser must provide detached and candid
advice that is always and every time for the betterment of the client.
On
the other hand, the client must learn to rely on his adviser through good and
bad market times. In today’s time, service plays an equally important role in
fostering the adviser-client relationship. To provide quality service, the
adviser must use technology for the portfolio management of his clients,
generating timely reminders to them about impending investments and
withdrawals, initiate properly vetted periodic portfolio reviews to the clients,
provide value-added services through online portals and mobile apps, enhance
digital outreach through innovative and targeted use of social media.
You
can always trust at the best financial planner for your
all kind of investment planning and advisory.
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