Category: Financial Planning

What are the benefits of utilising the services of a financial advisor

Should one make financial decisions independently or through a financial advisor

Financial advice revolves around money, and the affluent individuals that most financial planners work with have a good amount of it. Financial advice revolves around investments, and how to manage them effectively. A lot of time is often spent on investment portfolios, asset allocation, and decisions about particular investments, including whether to implement them with passive or active strategies.

However the value of financial advice extends far beyond just investment returns. Explained below are the benefits  of financial advice, beyond just the investment selection and the passive/active debate. In a world where many financial advisory firms have become increasingly investment-centric, hopefully this will be a helpful reminder of all the other values that financial advisors bring to the table.

The top beneficial services as provided by a financial advisor are

Goal Planning :

Investing individually requires a great deal of time and expertise in establishing appropriate, realistic and manageable goals. Often people don’t even know what they should be concerned with or what they should include as part of the investment. A good advisor comes into picture in this regard and provides one with the clear goal and plan regarding investment. Infact the investment advice is customised as per the client’s needs/money availability. The advisor provides an unbiased approach to one’s personal finances.

Investment and Portfolio Management :

The Financial Advisor’s primary responsibility is to help the investor to  build, diversify and monitor his/her portfolio. Research analysts, equity and fixed income trading specialists and asset managers will assist in the process..

The exercise of allocating funds among various investment vehicles and asset classes is at the heart of investment management. Asset classes exhibit different market dynamics, and different interaction effects. Thus the allocation of money among asset classes and among investment vehicles within asset classes will have an enormous effect on the performance of an investment portfolio and this is but an important functional benefit provided by the Financial Advisor.


Various studies demonstrate that certain investment characteristics can and do outperform with persistence over time (even though they can and do underperform for significant periods). These include size (the small-cap premium), value, momentum, low beta and concentration. Passive market weightings cannot take advantage of these opportunities. 4. Risk Management. Passive management looks to “stay the course” through all times and seasons. Thus it can only manage risk by adjusting one’s asset allocation and, even then, will only do so on account of non-market factors (such as advancing age, a change in goals or a change in circumstances).

Good advice (of a financial advisor) can make such adjustments more effective. It can also provide other tools for managing risk, including asset/liability matching and tactical adjustments due to long-term factors such as a secular bear market or low expected returns. Good advice can also offer various hedging and insurance strategies.

Senior Protection:

The ability to make effective financial decisions declines with age. To put it starkly, research shows that financial literacy declines by about 2% each year after age 60. Despite that decline, the self-confidence of the seniors in their financial abilities remains undiminished as they age. That’s a scary combination that a good advisor can guard against.

Tax Efficiency:

A financial planner can suggest tax strategies that will help one to reduce potential income tax, capital gains tax and inheritance tax liabilities. Any tax treatment mentioned is based on personal circumstances and current legislation, which is subject to change.

Financial Planning:

Financial planning involves budgeting, goals, appropriate insurance, comprehensive planning for lifestyle, retirement, legacy and more. It also involves crisis prevention and management. Great investment management can be undone in a hurry with poor financial planning. A good financial planner can work to help individuals formulate, monitor, adjust and meet their personal and financial goals. And this involves quite a real bit of expertise and professionalism which only an expert financial planner can provide.

The planning process helps one to fully understand one’s existing financial situation, assess the suitability of any new investment opportunity, and give a clearer idea of what one needs to do to achieve financial objectives.

Ultimately, a good advisor can and will influence and even change an investor’ behavior. In a world where personal financial issues have become increasingly and often unnecessarily complex, a good advisor can help you figure out what is true and what isn’t, what works, what matters, what is useful, and what can go wrong.

Peace of mind and security :

A person’s financial affairs will be organized and kept up to date through regular reviews with one’s financial planner.

Customised Solutions :

While many financial advisors offer standardised portfolios, some offer highly customised investment portfolio.

Check the fees, credentials and experience of your financial advisor.

Even after one finds a solid, reputable advisor, it is advisable to still check how much one is charged in terms of fees.

Sometimes there are legitimate reasons for paying higher fees so one must make sure to give one’s advisor the opportunity  to explain.

Hiring an experienced and professional financial planner costs money. Ability to pay can be used as a benchmark for deciding whether to hire a financial planner or do it alone.  It’s a simple trade-off— one pays fees to save  time, efforts and get professional advice.

Similarly Portfolio Management and implementation is the crux to a financial plan. once the road map is provided, one needs to implement the advice of the financial planner as per the investment policy statement to meet the goals and ensure the investments chosen are according to one’s risk profile.

Debalina Roy Chowdhury

Content Writer Dilzer Consultants