What are Financial Advisers and Why You Need Them

What are Financial Advisers and Why You Need Them

According to Wikipedia, a financial adviser (or advisor) is a professional who renders financial services to clients. What are these financial services then? As you grow in your career, your bank money will grow as well. You will decide then to invest. What and how to invest? If it’s your first-time investing and you don’t know anything about investing, then make the decision to hire a financial adviser. Financial advisers will come in handy if you decide to invest, especially in complex financial products. There are mutual funds, bonds, unit trusts, shares, traded life policies, structured deposits, investment-linked insurance policies.

Where to Find Financial Advisers

There are two types of financial advisers. Some independent financial advisers can give you advice on which product to sell from any financial institution. They are not affiliated with a particular company; therefore, they are at liberty to propose without limitation. You may get the best product which specifically suits your requirements.

The second type of financial adviser are the restricted advisers. They are those, as the name suggests, are affiliated with a specific financial institution. Therefore they will only propose products available from the financial institution where they are working.

To get the best professional advice, it is recommended that you hire an Independent Financial Adviser. A Restricted Financial Adviser may be a good one, however, they may be biased with their proposal for you. The product they propose to sell may have the same benefits from another institution but can be acquired at a lesser cost.

When Do You Need a Financial Adviser

You may need a financial adviser first when you decide to invest. A financial advisor will give you options on how to smartly invest your money. However, you should also educate yourself, because their recommendations may not be what you require. Their help will also come in handy for financial and tax planning.

The more successful you are, the more money you have, and the more complicated your tax requirements will be. You could also need them for annuities, which are products you can trade your pension for upon retirement.

Their help, when purchasing protection insurance, will also be valuable. There are things to consider because it is sometimes complex. It may be done cheaply without a financial expert, but again you want to be sure about this.

For securing pension and pension transfers you also need a financial adviser. It may be a somewhat complicated situation, especially if you desire to transfer a substantial existing pension.

How Much Does it Cost

There are different ways to pay a financial adviser, but the most common one is percentage fee. They will charge a certain percentage that is based on the amount of advice you need. Fixed fee rates are where they typically charge a fixed amount for specific services like investing, etc.

Charging by an hourly rate, which is where financial advisers charge by the hour. If you pay by the hour, ask for the itemization of the work they are going to do.

Financial advisors have a lot to offer to those who choose to utilize their skills. They can help you decide the smartest way to manage your finances, all the way from investing to how you prepare your taxes.