Last Modified on December 3, 2020

Although there is no single book rule to ensure a financially stable future, the one thing that can contribute to being economically sound is having a good financial plan. A comprehensive plan can allow you to prepare for unexpected contingencies, be more in control of your money, and avoid circumstances where you run out of funds. However, devising a plan on your own can seem unnerving and sometimes even impossible. But the right financial advisor can help you keep your eye on your goals and adopt suitable strategies to achieve them.

Here are 8 reasons why financial advisors can create a good financial plan for you:

1. To set a realistic timeline

As individuals, your goals may sometimes depend on how well your peers are doing or what your family members require at a given time. Social pressures can dictate many important life decisions without being able to look at things with an unbiased view. This can force you to set unrealistic timelines, such as buying a house at a certain age or having a specific sum of money in your bank account irrespective of your other investments and savings. A financial advisor can bring in more reason to your choices. These professionals can present a suitable time horizon as per your age, income, family composition, and suggest the time needed to accomplish each goal. This enables you to achieve your targets without compromising with your short-term and long-term needs.

2. To monitor your investments

Investing your money is not a one-time activity. However, most people tend to forget about their investments over time. Depending on how a particular stock, fund, bond, or equity functions, you may have to sell or buy some units. Timing the market can bring in great returns. However, due to busy schedules, you may find it challenging to stay up to date with the daily fluctuations. Having a financial advisor will ensure that you do not miss out on such opportunities. As a professional, it is their job to find the most lucrative opportunities for you, so that you can benefit from the right products at the right time.

3. To reduce stress

Anything that involves money can be a source of stress. It is hard to invest your money, given the inevitability of risk that comes with it. Moreover, the limited knowledge of how most instruments operate and the impact of big and small changes in the law, economic policies, market cycles, etc. can be a cause of significant losses. Most investors do not have this information. However, a skilled and experienced financial advisor would always be well-acquainted with all of these extremal factors. Knowing that someone else has an attentive eye on aspects that can financially harm you can offer you peace of mind and reduce unnecessary stress and anxiety.

4. To invest in better funds

Some accounts and funds are only accessible to certified financial advisors. As an individual investor, you will not have direct permission to invest in them. However, a professional can find them and offer them to you for investment. These exclusive options can be of great strategic importance in earning profits and allow you to considerably grow your wealth and build a significant pool of funds over time.

5. To draft a fool-proof estate plan

Estate planning is a wide concept that entails many components, such as a will, a trust, probate, a health directive, and more. Depending on your family members, their ages, and needs, a financial advisor can help you make a suitable estate plan. An estate plan requires you to synchronize the names of your nominees on the will to individual accounts and policies, such as your pension plan, insurance policy, bank savings account, etc. You will also require a guardian or a power of attorney for your health directives or minor children. All of these minute details may be overlooked by you, but will not be ignored by a professional.

6. To plan your taxes

Taxes can erode years of savings if not planned well. How you use your assets, income from various accounts, inheritance etc. will govern your taxable income. A financial advisor can help you plan your retirement withdrawals in a manner that does not fetch you penalties and yet does not increase your taxable income. They can also help you minimize capital gains taxes in a year. Striking the right balance can be hard. This is why relying on a competent advisor is advised.

7. To diversify your portfolio

Striking the right balance is also important when it comes to your portfolio. In order to lower the overall risk, most financial experts recommend diversifying. Diversification can distribute the threat from market forces across your investments. For instance, if you buy stocks from different industries such as consumer goods and gold, the chances of them both reacting to fluctuations in the same manner, are relatively bleak. Hence, even if one stock performs poorly, the other one will likely be able to make up for the losses incurred. But finding the ideal opportunities of diversification is not as easy as they seem. Moreover, over-diversification can also harm you inversely. Financial advisors help you find the equilibrium and stick to the optimum number of stocks suitable for your need and risk appetite.

8. To stay on track

It is common to divert your attention from the main picture. Life situations, growing responsibilities, and increasing debts, often come in the way of your dreams and aspirations. All of this can be avoided with a financial advisor. When you have periodic meetings and consultations with your advisor, you ensure that you do not falter along the way. A sign of a great advisor is also to motivate and teach you as time passes to make more sound choices with your money. This is a useful strategy to stay fixated on your goals.

To sum it up

Financial advisors can be of great importance in developing a good financial plan. These professionals can guide you on your finances, offer recommendations on how to save and invest, and help you mitigate risk.

If you want to create a good financial plan that would best suit your specific financial goals, you can get in touch with top professional financial advisors.