While most people understand the importance of saving and investing for the future, some may not have the time or the flair to follow a long-term plan.
A financial planner guides an investor through their wealth management journey and helps them manage their finances. There are cases where the use of the services of a professional has been very helpful.
To get on the right track for wealth creation – For those who are ready to take control of their present and future financial situation, hiring a financial planner could be helpful. A good financial planner will first understand their current situation, future goals, and emotional biases about wealth, and then develop a comprehensive personalized plan.
Need for clarity in a portfolio – Most start investing on an ad hoc basis, trying to replicate the success of others or based on suggestions. Experts say everyone’s risk appetite and investment outlook are different. A financial planner can help assess a crowded, unmanaged, or underperforming portfolio in the context of its risk profile, while also suggesting the right path.
During a major life-changing event – Major life-changing events affect a person’s finances, such as getting married, having a baby, or buying a new home. Experts say you need to plan and align your finances with the event as well as the impact it could have on yourself. In such a situation, a financial advisor can offer sound advice and help navigate the event with a correct and long-term approach.
During windfall gains – This could include earnings from an insurance payment, inheritance, sale of assets, an IPO, or unexpected lottery winnings, etc. Commonly seen, most people start spending too much money or are overwhelmed by the situation, and end up making bad personal and financial decisions. . A financial advisor can guide a person on various legal, financial and tax implications surrounding different types of such gains with the right investment plan to help grow their wealth.
As retirement approaches – The money management approach shifts from creating wealth to preserving capital and generating income as retirement approaches. Meanwhile, a portfolio should have low-risk assets that can generate a stable source of income, which might also require a full reassessment by a financial planner to ensure the corpus lasts longer than the investor and n is not affected by inflation and longevity risk.
To optimize your tax liability – A change in tax regime, an increase in income, or to make the most of various tax breaks could be another opportunity to hire a professional. One might be aware of the main deductions, but a financial expert can help maximize the benefits available to a taxpayer under their tax system and also find opportunities to save tax.