We often struggle with managing our finances either because we are not saving enough or we don’t know where to invest our savings or we don’t know how to plan for and achieve our financial goals. A financial advisor can help us get answers to such questions. A financial advisor can guide you to plan your savings and investments, manage your taxes and insurance and also help you with Estate Planning. A financial advisor assesses your financial health, gauges your risk appetite, prepares a financial plan for you and implements and reviews the financial plan periodically, to ensure that you achieve your financial goals.
The primary function of a financial advisor is to help you to manage your finances and achieve your financial goals. Your financial goals could include planning for your retirement, planning for your child’s higher education, planning for a wedding in the family or any other goal which will require a large corpus.
The financial advisor starts with a careful study of your financial health in terms of assets and liabilities, income and expenses. A study of your current financial health is essential before any plans are made to achieve future goals. He will assess your risk tolerance and risk-bearing capacity to determine the asset allocation most suitable for you. Risk tolerance refers to your willingness or comfort level to withstand the ups and downs of the stock market. Risk bearing capacity refers to your ability to take risks. Asset allocation refers to the proportion of stocks, bonds and other asset classes in your portfolio of investments. The asset allocation has to be in line with your risk appetite, while at the same time it should enable you to achieve your goals. He will then provide a financial plan which states in detail the recommended strategy to achieve your financial goals. After you mutually agree with the strategy the financial plan is implemented by opening the relevant accounts and investing the money as discussed. The implemented strategy is periodically reviewed to ensure that it is performing as planned, and is in line with your current situation and goals. Your financial advisor will also advise you about which and how much insurance you should buy and also about how you can manage your taxes. Finally, upon retirement, your financial advisor can also guide you through estate planning to take care of your loved ones. Estate planning refers to the arrangements made for the smooth transfer of your wealth to your loved ones after your death.
The investment avenues which your financial advisor can guide you through include individual stocks, mutual funds, ETFs, Bonds, Real Estate Investment Trusts as well as Alternative Investments. Financial advisors are often referred to as Financial Planners. They are not the same as Stock Brokers, Tax planners, Insurance advisors or Estate Planners who provide specialised services in specific areas related to your finances. Financial advisors need to pass certain examinations and acquire certain licenses before they can practice as financial advisors. They may work as an individual or be a part of a small or large organisation offering financial advisory services. You should review your financial advisor’s qualifications, background and charges before you start using his services.
Mungekar Wealth 