In other to truly appreciate good advice when seeking financial advice. You may wish to begin the process with understanding what you define as value.
Value can take different meaning and we all have a different definition to value that closely aligns with our own needs. The oxford dictionary defines value as
Noun
- The regard that something is held to deserve; the importance, worth, or usefulness of something.
- Principles or standards of behaviour; one’s judgement of what is important in life.
Verb
- estimate the monetary worth of.
- consider (someone or something) to be important or beneficial; have a high opinion of
To appreciate advice, we must gain a better understanding of its purpose. To some, advice is about:
- Can you help me maximise investment returns on my portfolio?
- Can you help me reach my financial goals?
- Can you help me understand the tax consequences of my financial decisions?
- Can you help me understand financial instruments and concepts?
- Can you act as my financial coach and mentor?
- Can you help me stay in control of my emotions?
A recent survey conducted by money marketing, professional adviser and wealth advisers show what clients value the most from advice.
In the past investors have internalized the industry’s past tendency to over-emphasize returns and benchmark relative performance. The above research shows that the interpersonal side of advice, which includes personalization and behavioural coaching, can be the most valuable aspect of professional advice.
The value of advice is far greater than returns, asset allocation, product selection and stock selection. The best advice sometimes is more financial coaching or navigating life events and less stock-picking. Short-term returns are only part of the picture.
A financial plan creates an opportunity to order and prioritise those goals
For representation and understanding the pendulum in this video represents our goals. Those goals could
- Purchasing a property,
- Savings and investment for your future
- Paying for a marriage
- Retirement plan
- Buying a car
- Paying for your daughter’s wedding
- Paying for your children’s education
- Savings for your own business
- Investing for later life care
- Funding a trip of a lifetime
- Funding care fees
Financial advice is given at a point where all the pendulums are aligned.
This represents a set of objectives that are prioritised and aligned. Over time our priorities would change as seen from the movement of the pendulum. From time-to-time changes in our personal circumstance would be the number one cause of this chaos. Events outside of our control such as
- Loss of a loved one
- Caring for a relative
- Financial hardship
- Loss of work
- Accident
- Illness
- Unstable economic, social, and political environment
All outside of our control. The purpose of ongoing advice is to give you peace of mind, control, and some flexibility. An opportunity to review, re-align, rebalance and regain control over your financial future. Our purpose is to help ensure you have all of the relevant information to ensure that those set objectives are met. At review, you can expect your financial planner to answer these five keys questions
- Is my existing investment strategy on track?
- Am I saving tax efficiently?
- Is my income protected?
- How are you preserving my assets?
- How does the existing plan affect my family?
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