Why You Should Hire a Financial Planner

WHY YOU SHOULD HIRE A FINANCIAL PLANNER

• The value of hiring a financial planner extends beyond the focus on investment returns. The financial planner will offer insights about tax efficiency and taxation as well as other parts of financial planning that matter aside from the money itself. In this post, we will be looking at a few reasons why you should hire a financial planner:

GOAL FORMATION • Most individual investors face problems when it comes to establishing realistic goals. They often find it difficult to decide on what to focus on and also what to accomplish. When you hire a financial planner, he will help you to form goals that can be easily achieved.

ALLOCATION OF ASSET There are three components of the total return of a portfolio: • Incremental returns because of asset allocation

• Returns because of market timing, fees and security selection • Returns from the overall movement of the market Studies have shown that about three quarters of the variation in returns in a typical portfolio comes from market movement (1), with the remaining portfolio roughly split evenly between (2) and (3). The practice of allocating funds to various asset classes and investment vehicles is at the centre of investment management.

• You should know that asset classes exhibit different interaction effects and different market dynamics. Therefore, allocation of money among investment vehicles and asset classes within classes will have a huge effect on how an investment portfolio performs. When you hire a financial planner, he will be able to do this with much ease.

RISK MANAGEMENT • Asset allocation adjustment can be done based on nonmarket factors like change in circumstances, change in goals or advancing age. When you get good advice from a planner, the adjustments will be more effective. You can also get other tools for managing risk, including tactical adjustments and liability matching because of long term factors such as low expected returns. Getting advice from a financial planner can offer a number of insurance and hedging strategies.

BEHAVIORAL MANAGEMENT • It is in human nature to get used to cognitive and behavioral biases stand in our progress and hold back our success.

Humans are prone to flitting hitter and always changing the next big thing, strategy, shiny object or idea. When you hire a good financial planner, he will help you to overcome such biases.

SENIOR PROTECTION • Your ability to make better financial decisions declines as you age. Studies have shown that financial literacy reduces by about 2 percent every year after the age of 60. However, despite the decline, human self confidence in financial abilities remains undiminished with age. You will agree to the fact that that’s indeed a scary combination. A financial planner can guard you against this.

• Working with a financial planner is the best way to build wealth and save for retirement, college and other important events. A financial planner will take you through challenging times just like a coach does with an athlete. This means that you will be able to reach your long term financial goals.

THANK YOU !