The need for constant check ups: how financial advisors are the banking world's dentists
The short answer is exactly the same if we ask ‘Does everyone need a dentist?’ No, but you are probably better off with professional help than without it.
Some people go their entire life without having their teeth checked. These people would probably not boast a perfect smile.
People rarely go to look for a dentist unless they already have a problem. Toothache, bleeding gums, cracked tooth. All reasons to urgently thumb through the business pages in search of a qualified professional who can help with their situation but surely this is already too late. A far healthier solution is to have regular checkups with a qualified professional who comes highly recommended. Call it preventative maintenance.
The same can be applied to your personal financial situation. It is true that financial advice can be costly and that consultancy fees may seem high in the short term. However, consider that an hour spent with a financial planner or a qualified advisor now, removing any potential build-up of financial ‘plaque’. Examining any developing cavities in your plans for the future could prevent the need for a full-blown root canal operation on your portfolio a few years down the line.
The main goal of a professional financial advisor is to save you money. Whether by reducing the cost of transactions that you make regularly, reducing your tax liabilities or by decreasing the negative effect of inflation on your spending power, the ultimate aim is always the same. Far too often the emphasis is laid on short-term returns at the cost of long-term stability and security.
An experienced advisor may charge several hundred dollars per hour for a thorough examination of your circumstances and recommendation of an appropriate course of action. This can be off-putting to individuals who only look at the immediate outlay but can offer significant benefit over time. A penny saved is only a penny earned if it is invested wisely. You will often find that a good advisor can save you more than the equivalent of their fee through their advice in the first consultation. Banking, insurance, investment and inheritance in the Middle-East can be complicated and costly which is why the help of a professional can save you a lot of time and effort.
There are, of course, pitfalls to avoid. Firstly, the temptation to apply a DIY approach. With the wide range of information available online many investors feel they can manage their own affairs and save themselves the fee. Consider the time and effort you will spend on this and ask yourself if the saving is equivalent to your own hourly work rate. Then bear in mind that where your own assets are concerned, it is very hard to be objective. Emotional investing is a very high-risk strategy. Secondly, know who you are speaking to. You would not want dental surgery from someone you could not trust and financial surgery is no different. Check credentials, qualifications and the opinions of other clients for any company or individual who is offering their services. The very best consultants work by introduction and referral and so will be happy to provide testimonials or references. Finally, try to look at the long term. It is always sensible to question any advice that you don’t understand but a good advisor will be making their recommendation to you based on extensive experience, calculation and knowledge of your individual circumstances. You would not refuse a filling from your dentist on the off-chance that the tooth just healed on its own or to save a few dollars today.
To summarise, a good advisor will be able to tell you very early in the relationship if it is in your best interests to employ their services or not. It is in their best interests for you to be a prosperous and happy client for life. Find someone you trust to examine your situation, add value where possible and provide regular checkups to brighten your financial smile.
By: Edward Mainwaring-Burton