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Thu, 10/15/2009 - 11:28
Cast Your Vote:
Is it better to engage a financial adviser to help manage your investment goals? We're not talking about insurance or other protection plans. We're talking about whether you trust getting others to help grow your money. Why and why not? Share your views here!
Contest Closed! For those looking for this week's question of the week, please follow the link below:
http://www.qotion.com/discussion/should-financial-agents-offer-incentive...
Check out this article by a financial planner in favor of financial planning.
http://www.qotion.com/why-we-need-financial-planning
I would say, trust my financial advisor to give advice to my benefits and at the same time discern the advices so that I can make sound decision on my financial plan.
There are some financial advisors that I'm willing to talk to while some are not. Trust or no trust? I have some "checklist" to discern whether or not to trust them:
First - interest check
Basically those who at the very first appointment keep pushing me for signing up a plan (be it endowment, saving, insurance, etc), I'll ask them to go far far away. The typical phrases that I've heard will be "do you think 500 a month is comfortable to you?", while you say no, they'll lower the premium and ask until you say "yes".
A good financial advisor will explain to you, why you need to have such plan and the amount of commitment you should consider after some evaluation questions on your finances.
Second - patient
I've meet with some financial advisor that have great skills explaining to me how much do I need for retirement. But straight after the session, I was being cornered into signing a plan with them. I think they are simply impatient to get the deal closed and you to pay for their time.
A good financial advisor will let you have time to consider if you feel it is too rush to make a decision on the spot. A bad one probably rudely ask "what else do you want to consider?", come on, sometimes I just need sometime to think about it and some 2nd opinion.
Third - experience/expertise and "after sales"
When you need advice on some financial matters, such as a mortgage loan, a short term loan, or even some CPF related questions, are they ready to assist you? Or even if you wanted to start a business and may need to get some fund from your existing investment, do they have experience or knowledge to assist you?
I feel that this is where you and distinguish a true financial advisor that you can trust on. A good one will try help you to source out some advice if he is not familiar with on the matter, so that he'll know it better as well. You'll be surprised that some are too busy to even return your missed call.
They are the one that can help you to plan out some of your goals in life (financially, or financially related) and the one that will tell you indeed you need to long term plan for your goal.
I recalled years back when I've just graduated with 40k loans to repay on a prime interest rate, that time, I didn't even think of planning as I'm rather panic on when can I repay that with the pathetic fresh grad pay. And that's where financial advisor come in and tell you what's the future can be like and what you can or need to do to achieve your dream.
I'm glad that I've engaged a financial advisor that had passed the above 3 tests that I can trust on for financial advices, hope this little 3 point check list will help you too.
I think it's good to engage a financial advisor that knows significantly more than you.
If you do not know much, a financial advisor is the way to go to learn and to get some info.
However, if you are an experienced investor, finding good objective financial advice might be a waste of too much time. Many people have many opinions when it comes to the best way to grow your money. Whose opinion are you going to trust? When investments do not make expected profit, who are you going to blame? There are just too many factors to consider but when push comes to shove, the only person you can blame is yourself.
Rather than relying on financial advisors, aim to establish a certain strategy on growing your wealth. Trusting others with your investment decisions is not a good long term solution. You might end up in a spot where you just do not know what is happening with your money and you find yourself in overly diversified investment strategies that do not reap much fruit but require too much management.
So I say use financial advisors as a means to learn only in the short term. Do not rely on them for your life's investment decisions but aim to establish a good sound investment strategy yourself. In that way, chances are in the long run, you'd be in a better position than someone who needs a financial advisor around to make a decision.
I have to say it can be hard to gauge if an advisor knows a lot more (about investments)
Salesfolk will always know more about a product than the consumer.
I agree to converse with financial advisors to get comfortable with the terms and all the information used, but i would not engage an advisor just based on knowledge alone. This is also because for savvy / educated investors, you only have yourself to blame for the transactions!
Somehow agree with brat, surely a financial advisor can advice you on the investment, and you yourselves will know the best of your own financial situation.
The purpose of engaging a financial advisor is so that they can really give you insight of managing your finances. There are many things that you might overlooked, and at times, we may look at a very short term returns for our investment, of which the financial advisor will advise you to look at the long term but better returns.
And as a rule of scarcity, we have limited time. Financial advisor devoted all their time into analyzing and advising their clients to make sound decisions (that's why they are paid for isn't it), so that their client can focus on their own business, be it a own business or working for others. If you have the expertise and are gifted to manage your own investment very well, that's great. But for most people, that's not the case and even they have the talent, they may not have time for that.
So, it is good to get a good financial advisor that do their research and job well. And work together with them to grow your wealth.
I think the question is really broad. In general, here's why I wouldn't normally engage a financial adviser for my investments - unless i HAVE to!
Investments come in several forms and types - there's stocks, money markets, property, business amongst others.
Down to its basics, investment decisions are made on factors such as the risk, the return, entry and exit, costs, and other information that may be privy to the investor.
Once I'm ready to invest a sum of money, I compare investment options - I like having options, having an exit plan, and lowest costs involved. Having an advisor sometimes means fees and sales charges which affect my return. Plus, an "interest" check sometimes reveal that the advisor is not always advising to my interest =S
I think i will value a financial advisor's help with investments where he is experienced and professionally qualified, just for the sake of liability and the event of a worst case scenario happening. That said, I wouldn't invest in something I don't understand.
Service, sales or patience in the transaction matters little (if at all) to me!
Before you seek any advise from Financial planner/advisor, do some homework first.
There are a lots website giving good advise and analysis example Qotion.com.
Financial planner/advisor earn commission so
we can't prevent them from pushing products that may not really suit us.
Most important don't be greedy, don't ever believe on high return no risk unless contract state as Capital Guaranteed, but this normally apply to Fixed deposit.
Actually, capital guaranteed products generally do not give high returns, since they need to maintain a large portion of the sum assured and use less of it to invest, Mr Tan Kin Lian, ex-CEO of NTUC Income, gave a pretty insightful post about these products. Link's below.
http://tankinlian.blogspot.com/2007/07/poor-return-on-capital-guaranteed.html
I'm rather surprised nobody actually thinks it's better to invest on your own. Is it neccessary to get a financial adviser at all to help plan and manage your investments?
Well my take is that if you have the time and care enough about investing then you should go ahead and invest by yourself. Doing necessary research and studying financial instruments in depth so that you limit your risk takes a lot of time that most working people just don't have. That's where the financial advisors come in, they make their living from the research and being much more informed than the average investors (that is if the financial advisor takes his job seriously.)
You definitely have to find a financial advisor you can trust and really values you as a long-term customer. If he is genuinely concern about your investments and his relationship with you in the long run it is in his best interest if he gives you real genuine advice. However it also falls to the investor to think rationally and don't ask for unreasonable returns on his portfolio because if that's the case either the financial advisor has to lie and tell you that these products will give the unbelievable returns so he can get the business, or he'll turn you away or tell you to dream on and lose the business. It also comes down to expectations of the investor.
You can also argue that if you want to invest by yourself you could very well make good money by just taking equity. It's been shown that equity always go up in the long run, but are most people disciplined enough to not let short term returns cloud their long-term plan? I doubt many people can be as unemotional in investing as that it is needed to do well.
My take is half half becos I have some reservations with regards to financial advisors.
I am still in the process of learning, and I find that the more I know the more I need to know. We must be aware of what is happening around us everyday in the world of investments.
I do think that financial advisors on the whole are pretty much more informed than the average self investor who may not have the time and unable to stay focus all the time. Having said that, I still prefer to do my own investments.
There are much much more investments out there than my money can invest in. The things that you invest in - If you can get it right half the time, I think it's good enough. I would think the most important thing is the timing, i.e. entry level, must be right for most investments. For this, we look at the macro picture. We do not need to be in action all the time.
Financial advisors may have mthly targets to meet. Hence they tend to be abit pushy. Somehow we would have this uneasy feeling like we are kind of obligated to buy and to make a decision within a stipulated time frame.. But of course there are some very good ones too.
If I were to engage the services of a financial planner, maybe it is to re-organise my portfolio once in a while.
Sometimes I tend to hold on to some loss making investments for too long for no reason. By listening to them, we can gauge how well informed they are, which areas they are strong in, and where our portfolio stand, and then make certain adjustments to our portfolio allocation where necessary.
Financial Alliance Pte Ltd
To address this question, I'd assume the investment is any tool or instrument to make money for the consumer, and not to confuse with other aspects of financial planning (e.g. cashflow budgeting, protection planning, estate transfer).
I suppose in any investment, a few considerations would naturally surface (some if not all):
1. What is the investment objective? Has the objective been quantified in dollar terms?
2. How much time do I assign to achieve this objective?
3. What will be the calculated yield (or return rate) required to achieve the objective?
4. Can I tolerate any loss involved if my investment does not materialize?
5. What are my current and future resources available to help me achieve the objective?
Not everyone will have a specific objective in mind. Most people would just like to see their savings acc figure increase over time.
If one has difficulty in mapping out these thought processes, perhaps getting prelim advice from a financial adviser is not a bad idea. Most should be competent enough to assist on this aspect. Subsequently, the next step in whether to have the FA handle investing for you is a separate matter of choice. Assuming the adviser is competent in use of asset allocation to diversify risk and has a planned strategy in line with market cycles to cater to your investment objective, the key likely lies in whether you are comfortable to be the DIY investment director doing the research dilligently or would like to outsource this to the FA.
From a expense angle, there are savings from DIY investing. Whether it's passive investing via index ETFs or buying of funds from online distributors (lump sum or monthly RSP), transaction cost tend to be generally lower via DIY. Though there are limitations on fund switching involving some costs, this varies depending on the distributor.
I think there is always a case to seek an informed opinion from a qualified FA. The question of whether to hire the services of a FA to handle and organize your investments is a personal one to answer. It depends on how investment savvy one is, how much time one has to devote to the subject, and probably the passion for it. If one decides to engage, there will be always be necessary renumeration for the FA. Just go in with eyes open and agreed expectations. My thoughts.
Post Shifted to the current question of the week.
http://www.qotion.com/discussion/should-financial-agents-offer-incentive...
Seems like this week's answer can go either way. From the poll results it's about half half, meaning there are some who favor investing through advisers while others prefer to go it alone.
Some responses we really liked:
bratbrat83
"Rather than relying on financial advisors, aim to establish a certain strategy on growing your wealth. Trusting others with your investment decisions is not a good long term solution. You might end up in a spot where you just do not know what is happening with your money and you find yourself in overly diversified investment strategies that do not reap much fruit but require too much management."
souleaterjh
"If (the Financial Advisor) is genuinely concerned about your investments and his relationship with you in the long run, it is in his best interest if he gives you real genuine advice. However it also falls to the investor to think rationally and don't ask for unreasonable returns on his portfolio because if that's the case either the financial advisor has to lie and tell you that these products will give the unbelievable returns so he can get the business, or he'll turn you away or tell you to dream on and lose the business"
It's been tough choosing this week's winner. But in the end, we feel the most informative answer comes from Ee Min, a qualified financial consultant who gave us a way to objectively assess whether we need the services of a financial adviser.
"...there is always a case to seek an informed opinion from a qualified FA. The question of whether to hire the services of a FA to handle and organize your investments...depends on how investment savvy one is, how much time one has to devote to the subject, and probably the passion for it. If one decides to engage, there will be always be necessary renumeration for the FA."
Congrats to Ee Min for giving us the best answer this week, you just won yourself a pair of Shaw Movie Passes! Please forward us your mailing address to receive your prize.