If you think a financial planner’s only job is to beat the market, you’re sorely mistaken. This article provides some reasons to use a financial planner.
Some people may be 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 (and the less chance they’ll be duped by unscrupulous sales pitches).
But given all this information is at your fingertips, are the reasons to use a financial planner, such as Aisa group 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 there are Individual Savings Account (ISA) which most residents will know about but 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) to stay on top of law changes, new product launches, tax amendments and so on.
While it’s 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 and exchange traded funds 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?
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 our 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 we all cook all our meals at home from scratch, buy a bunch of manuals and learn to do our own car services, 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 worrying about their finances – That’s my job! Aisa staff 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, running and walking groups, – I would normally include travelling the world! No retiree wants to be worried about finances.
I have some clients who are widows or widowers and their spouse took charge of the finances. They have no desire to spend time learning or fretting about their finances at their time of life – again that’s my job. We can simply hold their hand, listening, guiding and planning with them. Engaging with a professional financial planning firm is also proven to help them create greater investment wealth – at least 2% per annum, probably more. My article last month explained the positive results of utilising a qualified investment management firm
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 many Cyprus clients the main focus is 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 can cover all areas for their Cyprus based clients.
Keeping the emotions in check
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. Reflect on how much they impact your decisions. An advisor can you help you recognise biases you may be overlooking.
You might make rash emotional decisions, too. It’s a known phenomenon that we humans 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 and help you make logical and rational decisions, rather than hitting the panic button.
There are many more reasons to use a financial planner and hopefully the areas above give you some ideas of how we help serve our clients. As always, our goal is to seek the best outcome for our clients, always. Call Aisa on 26 951 600.
Lee Hinton is an Associate Member of the Chartered Institute of Securities and Investments, holds the Cyprus Ministry of Finance Advanced Examination certificate and holds the UK Diploma in Financial Planning.