Simply stated, the goal of an Independent Financial Advisor (IFA) is to increase the net worth of their clients, choosing to use one can add value.
Many people think that financial advisors are only there to help with investment decisions, but the truth is that they can help you with any financial decision that you need to make including the right home purchase, car or home financing, investments, charitable donations, credit card issuers, and even the best places to handle your bank accounts.
They may also advise you about insurance issues or retirement funds. Whatever kind of financial help you need, a financial advisor with expertise in those areas is there to assist you.
Choosing an IFA
Your relationship with your IFA can be lengthy so it pays to choose somebody you get on with. Arrange meetings with three or four people and take your time in choosing.
The IFA you go with is there to help you. You may have specific issues you want to cover or you may be looking for a check-up on your personal finances. Your advisor should be adaptable and flexible in their approach.
How they earn money
There are two main ways financial advisors earn money:
The first is fee-based: The IFA receives commissions for the financial products they recommend and a broker. Some people see this as a conflict of interest.
The second is purely fee-based: They don't receive commissions for the financial vehicles they recommend. Only their clients pay these advisors, and there's no conflict of financial interests.
What services you should expect
Your advisor should take the time to get to know your entire financial situation, your risk tolerance and your goals, before setting a financial plan.
Once they've determined this they can help you allocate your money based on a mix of asset classes with varying degrees of risk that fit your time horizon and comfort level.
When you're comfortable with your financial plan and have determined your strategy, they can then make specific recommendations on the types of funds and securities that will best meet your needs.
If you hear of an interesting investment opportunity or a new stock offering, your advisor should be able to research and investigate these and help you decide if they fit into your overall plan.
If the markets become volatile, they should also be able to help you understand the reasons behind the instability.
What's more, they should bring investment opportunities to your attention, help you manage your expectations, and explain the rewards and risks of any investment.
At least once a year, your advisor should review your account with you and make any adjustments necessary to account for things like getting married, switching jobs, having a child or purchasing a home.
Your financial future
When you work with a financial advisor, the focus should be on you - your needs, your goals, and your unique situation.
With their insight, guidance and support you should have a successful long-term investment strategy that stays on the right track.
