Financial Advice and Its Role in Investment Success


Investing is filled with choices, jargon and complexity. This can be overwhelming and often prevents people from starting in the first place. Luckily, you don’t need to do this all alone. You can improve your chances of a successful investment by consulting a good financial advisor. Financial advisors do more than merely pick products or find the best performing unit trusts or investments, they help with your long-term financial planning. They can provide you with the experience and objectivity you need to traverse the investment landscape.

Financial advisors can help you make important decisions, therefore it is important to find someone you can trust. They help to formulate a plan that suits your long-term goals and can steer you away from the pitfalls usually associated with investing on your own. Independent financial advisors can:

  • Help formulate a plan
    A critical component to achieving financial success is a carefully crafted plan. You need to identify your goals and how to get there, which can be difficult for the first time investor. Financial advisors can develop a practical plan to suit your risk profile and goals.
  • Help choose the right products
    There are an overwhelming number of products available, each with their own complexity. An advisor can be invaluable in helping you sort through the clutter to identify the right product suited to your situation.
  • Help account for inflation
    Time erodes the buying power of your money. This is known as inflation. Choosing the right investment can help you achieve returns to counteract the effect of inflation, ensuring that the value of your savings is maintained.
  • Help you preserve your retirement savings if you change jobs
    If you are changing jobs or are retrenched, then it is important to preserve your retirement savings. Failing to do so might leave you with too little money to retire on. Advisors can use their experience to provide you with the best options available to you during this crucial period.
  • Help you to diversify
    Diversification is one of the keys to financial success. Financial advisors can identify the right products to ensure that you have good exposure to various options.
  • Help make rational decisions
    Investors often behave emotionally, which causes them to make irrational decisions. Investors switch hoping to avoid losses, but only succeed in locking in those losses. Advisors can help you avoid switching at the wrong time.

Finding a good financial advisor
You might be able to invest on your own, but you will greatly improve your chances of success if you consult a professional. Your relationship with your advisor is important, therefore you must find someone you can trust and whose investment philosophy you can buy into. Here are a few points to consider when you are evaluating a financial advisor:

  • Are they independent?
    Independent advisors don’t work for a particular provider and thus do not earn commission on certain products. This ensures that they are objective enough to choose the right products and to plot the path to your goals.
  • What type of qualifications do they have?
    All financial advisors are legally required to be licensed by a regulatory body. This typically includes regulatory exams and evaluations, which is an ongoing process. Find out about their academic history and enquire about any other credentials they may have. A financial advisor will provide you with a disclosure document, which contains information on what the advisor is legally allowed to help you with.
  • Find out about fee structures
    Transparency and disclosure are very important, thus you need to ensure that you understand the fee structure up front. Fees are typically charged as a percentage of the investment value, but there may also be other fees involved. Some advisors may even opt to charge for advice directly at an hourly rate. Don’t pay any fees unless you explicitly agreed to them.
  • How can they help you grow your wealth?
    The best advisors take the time to understand your needs and formulate a plan to complement them. They can help you remain rational and disciplined, even during trying times. An advisor’s key role is to help you rationally and objectively manage your savings.
  • Where can you find a financial advisor?
    Financial advisors will help you make some deeply personal and important choices; therefore the most important quality to identify is trust. The best place to start is finding a recommendation from someone you already trust and whose opinions you value. There are also, depending on where you are, a number of services available to help you find the right financial advisor for you.
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