Do You Need a Financial Adviser?

Do You Need a
Financial Adviser?

How to Make a Financial Plan

When making investment decisions, do you ask your spouse, parents, or friends? The truth of the matter is we all need professional advice when it comes to investments and personal finance. There are many things happening in the world of finance and investment, and we could all use the wisdom and expertise of experienced advisers.


If you want to retire at 40 or 50…

An experienced financial adviser can help you identify your financial goals and map out a plan to ensure your family’s financial security. He will help you spot costly mistakes you’ve been making without knowing it. An adviser can give you tips on how to make your money work by pointing out good investment deals that would suit your appetite for risk. He will also help you to minimize tax liabilities.

All these good advice do not come free, though. Independent financial advisers charge a fee and they are still hard to find here in the Philippines.

Others may charge you a commission since they are usually connected with insurance companies, banks and other financial institutions; every advice they give will thus come with a push to sell their product or service.

"An experienced financial adviser can help you identify your financial goals and map out a plan to ensure your family’s security."
Some are worried about that; but as long as they disclose their fee structure and you think things through before committing to buy anything, you will still benefit from these advise.

All these good advice do not come free, though. Independent financial advisers charge a fee and they are still hard to find here in the Philippines.

Others may charge you a commission since they are usually connected with insurance companies, banks and other financial institutions; every advice they give will thus come with a push to sell their product or service. Some are worried about that; but as long as they disclose their fee structure and you think things through before committing to buy anything, you will still benefit from these advise.

"An experienced financial adviser can help you identify your financial goals and map out a plan to ensure your family’s security."

Choosing your adviser

You don’t have to be rich to get the services of a financial adviser. The people you may be dealing with now may already qualify as your financial adviser.

These are the people who can give financial advice:
  • Accountants. In-house accountants and independent certified public accountants(CPAs) can give a wealth of advice on minimizing overhead, tax liabilities, and other expenses. They may also give you tips on what to do with your excess liquidity. They are not employed by banks and other financial institutions, so you know that their advice is objective and not “tied” with specific products and services. Deal with licensed CPAs only.
  • Lawyers. Like CPAs, they don’t give “tied” advice. Some lawyers specialize in tax matters and estate planning. However, they may not be able to give much advice on investments since this is not their main line.
  • Insurance agents. They can compute the amount of money you need to save now to live well in your retirement, and give you options on how to reach that goal. They can give you options on how your family’s financial security can be assured when you are gone. However, since they are usually connected with insurance companies, their advice is considered “tied.” When offered a product, keep an open mind and scout for other deals that may be offered by other institutions.
  • Stockbrokers. With the great effort they put in financial and market analyses, stockbrokers can give sophisticated advice on equities as an investment. They may also trade stocks for you based on your pre-agreed guidelines. Stockbrokers earn through commissions charged to you.

Relatively, banks can offer more services and financial advice given their resources. Some banks, for instance, also offer stock brokerage and other investment management services. Some consider them a one-stop financial partner: you can bank with them, get a loan from them and get financial advice from them.


Meeting your adviser for the first time

Your adviser is there to help you, so he needs to know the status of your financial health. Filipinos don’t like revealing even their real income, and this is a big problem in financial advisory. When crucial information is not disclosed, the quality of the advice suffers. Give your financial adviser enough and accurate details so he can work out a good plan for you. He will most likely have a fact-finding questionnaire that he will go over with you during your initial meeting.

Among other things, your adviser will determine how aggressive or conservative you are when it comes to investments, and what financial troubles you have, if any. Be honest and be open to his ideas.

Most advisers, especially the independent ones, will have a letter for you to sign stating the terms of business. This letter will spell out the services to be provided, and the charges, commissions and fees. It will also detail the extent of liability of the adviser, as well as the frequency of consultation and submission of reports. It will say how your money will be handled — usually in an account in your name separate from the company’s own account. Keep a copy of this document.


Spotting the good adviser

A good adviser will do the following:

  • Listen to your needs. Before he pitches an investment, a good adviser will get to know you and your needs first. Only then will he tailor-make a plan for you.
  • Review your portfolio. He will check on your investments periodically, say every three or six months, to let you know if you are getting maximum benefit from them. If not, he will give you advice on where to invest for greater returns.
  • Rebalance your portfolio. Due to market conditions, the value of your investments may change and you may need to re-invest in another vehicle. Your financial adviser will look at your asset allocation and see if your exposure to one type of investment will put you at greater risk. In that case, there may be a need to rebalance your portfolio.
  • Give access to specialists. If you need more information than what he can give, your adviser should be able to refer you to a specialist.
  • Give tax advice. Your adviser should be knowledgeable about tax laws and alert you on how taxes can affect your portfolio.
  • Be available. After selling you a product (example, an insurance policy), your financial adviser should still be available for questions and other things you may need. He should aim for a long-term relationship with you.

Warning – avoid these

Investment consultants you don’t know may call you offering a “once-in-a-lifetime” opportunity to invest in a product with a promised high return that sounds too good to be true (it probably is). And you may be pressured to decide right away. These are not good practices, and so-called investment consultants doing them should be avoided.



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