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Do you need a financial advisor? Find out

Manvi Agarwal
·7-min read

People have many questions about money. Some they can resolve via their research, but for others, they might need some help. And sometimes that is necessary for attaining a healthy financial future.

A trusted financial advisor can not only help you define your target but also get you in the best possible path to achieve that. Unfortunately, most people don’t always know if they need one.

So with that in mind, we outline some instances when you must consult a financial advisor.

1. ‘I am always struggling to complete my financial tasks’’: You are always overwhelmed trying to manage your finances.

Even though the process of financial planning has simplified over the years, people often find it overwhelming. And they are not wrong. As easy as it might seem, financial planning can be very cumbersome.

Firstly, you are to ensure that you have covered all the various aspects of financial planning. And even when you have done all of that, it doesn’t end. It’s not a one-time thing but an ongoing dynamic process that commands a lot of your time and attention. You need to monitor it periodically, to ensure that you are on the right track to attain your financial goals.

And since you are solely responsible for the planning and the executionIn, in a DIY financial planning situation, allotting adequate time is essential. So if you find yourself incapable or overwhelmed by the process, seek some help. Hire a financial advisor. They can guide you and help you with the heavy lifting.

2. ‘I have tried, but failed every single time’: If you have planned multiple times before but failed to accomplish anything

Acknowledging the importance of financial planning, you often vow to start the process at the earliest. Especially on special occasions like birthdays or new years etc. But, like everyone else, you too succumb to the daily pressures of life, failing to accomplish anything.

Now, if this is a recurring phenomenon, you need to stop running around in circles and seek help outside. As the sooner you get your finances in order, the better off you will be. Knowing where you stand today can help you identify ways to accelerate the process of getting you where you want to be.

Furthermore, time plays a huge role in investment planning. Giving your investments time allows them to compound and multiply your wealth faster. So don't waste any more of your precious time and appoint a financial advisor at the earliest.

3. ‘I don’t know if I am saving enough towards my financial goals’: You are not sure of your financial goals or if you are saving enough towards achieving them.

Not knowing if you are on track to achieve your long-term goals is quite common. But prolonging it for some time can harm your financial well-being. At the least, you need to have a general idea.

All long-term financial goals require long-term planning. You can't possibly reach your goals without it unless you are already investing regularly.

Nonetheless, you need to develop a solid plan and follow it through. But the problem is that most people are clueless about the type of planning they are required to do. And access to multiple online calculators and advisors confuses them even more. Even if you manage to work out a plan superficially, it can’t prepare you for stressful situations. Like if the stock markets fall 30% or if your living or healthcare costs double.

So, unless you are confident that you can handle such situations, it's best to consult a trusted financial advisor. Using a holistic approach, they can help you define where you are and where you need to be, further identifying the means for you to get there.

4. ‘’I often panic, not knowing what to do every time the markets move’: If your emotions constantly overpower your rationale thoughts

Now, this is an important factor when it comes to investment planning.

You don't realise it, but your emotions and your basic instincts play a huge role when it comes to investing. It affects all your decisions. For instance, if you panic (fear) and sell every time the markets fall, chances are you will never create wealth over the long term. Similarly, when the markets rise, and you start to invest (out of greed), you won't always generate a profit.

So, the key is not to let your emotions get in the way. If you are constantly distracted by the noise around you, you are bound to lose clarity of thought and worse, sway away from your long-term goals. Successful investors understand that. And therefore, keep calm even in the most precarious of situations. It's what sets them apart. And is an important quality every investor must imbibe.

So, if you find yourself driven by your emotions at all times, it's best to consult a financial advisor. He can help you keep calm by carving out a strategy that works in all situations.

5. Planning for long-term goals retirement, etc. requires a certain level of knowledge

Online financial calculators, goal-based mutual funds and robo-advisors have sure eased the process of investing. But there is still a lot more to financial planning and investing for long-term goals. You need a well-constructed strategy, which requires a certain level of knowledge that you might be lacking. You need to make multiple assumptions and incorporate several mathematical concepts in financial planning. Like for retirement planning, you must recognise: At what age do I want to retire? How much will I need when I retire? How much should I invest?

Now, since these assumptions are for a future far away from now, they often involve mathematical concepts like the time value of money, compound interest etc. And along with being difficult to analyse they are also time-consuming. So, if you don't have the intent or the time to learn, consider seeking the help of a trusted financial advisor. They can take care of all of this, giving you time to focus on your business or job.

6. If you have ignored these important aspects of financial planning

People often misunderstand financial planning with investment planning. Forgetting that it's not just about choosing the right investments, but about creating, managing and even passing on your long-term wealth. All of which requires you to adopt a holistic approach to financial planning. You have to think about what would happen to those who need you or rely on your income if something were to happen to you? Or let's say your beneficiaries are taken care of, but you don't have a plan for your legacy. Usually, the ownership of your various belongings resolves such issues, but you can always settle it via legal documents, such as wills and trusts.

So essentially, effective financial planning includes managing your investments, taxation, insurance (health and life) and estate planning.

But none of this can be done overnight and without any help. Some different rules and regulations govern each of these aspects of financial planning. And they are all prone to change. So you have to develop a deep understanding of all these aspects and update yourself continuously. Which can be a lot of work and you may need some help.

A trusted financial advisor can steer you in the right direction. But if you are confident about your financial planning moves, there is another option. You can have someone look over your financial plans. For a flat one-time fee, they can reassure you that you are on the right track to a healthy financial future. But, owing to any reasons, you aren't able to manage any of these aspects efficiently, it's best to consult a trusted advisor.

The devil is in the details. And you have to get everything right. As the simplest of mistakes can deal a big blow to your financial growth, derailing all your hard work. For instance:

  • Inadequate insurance can sometimes force you to borrow in times of emergency.

  • Ineffective tax planning can easily hamper the growth of your wealth.

  • An inefficient estate plan can result in high transfer costs like inheritance tax etc. obstructing a smooth transfer of your wealth to the next generation.

But seeking financial assistance does not absolve you of all responsibility. A financial planner can only direct you onto a path of wealth to achieve your financial goals. You are still the decision-maker. As these are your financial goals, the goals that you have established and the goals only you will achieve.