you’re sitting around the table with your friends and family at your weekly Saturday barbeque when someone starts to talk about how well their investment portfolio is doing or how they’re this close to putting down the deposit on their first home. You start to worry about your own progress on your financial journey and mention it to the group gathered. Then the advice comes flooding in and it seems everybody has a different opinion on how you could do better.
Sound familiar? We thought it might.
But you see the problem with this situation is that your friends and family, although they may mean well, are most likely not financial advisors. And just as you wouldn’t trust a financial advisor to build your house, why would you trust a builder to guide you on your financial journey?
A good financial advisor is a professional in their field, with experience helping those just like you achieve every single one of their financial goals. In order to help you achieve those goals they also take into account a number of different facets of your financial world that your friends and family may not, such as:
Assets & Liabilities
When you sit down with a financial advisor to develop a financial plan that is right for you, your advisor will take the time to get to know all of your assets and liabilities. This means that they have a comprehensive understanding of your current financial situation and can utilise their expertise to help you make the most of what you have to work towards achieving your goals.
Your friends and family don’t have this same understanding of your financial world and, as a result, are likely making recommendations based on what they see rather than the whole picture. Thus, their advice might only target one aspect of your financial world without considering how that could impact on the likelihood of you achieving your other financial goals.
Your Income & Expenses
It’s a cultural taboo that still persists: talking about money with your friends and family can be awkward. As a result, it’s likely that your loved ones only have a partial picture of the amount of income you have coming in and your regular expenses.
Your financial advisor, on the other hand, has a crystal-clear understanding of your income and every single one of your expenses. This means that their recommendations are made based on a realistic picture of where you’re currently at in your financial journey and how you can move forward with the level of income you have.
As your financial partner for life, your financial advisor will also make adjustments to your financial plan if there are any changes to your income or amount of expenses in order to make sure that you’re always on track to achieving financial security and success.
Your Goals & Objectives
When you first began working with your financial advisor, you would have identified goals that you wanted to work towards. These goals may have been similar to those of the people around you – such as purchasing an investment property or paying off your credit card debt – or they may have been completely unique to your particular situation.
Both of these types of goals are completely valid because your financial advisor isn’t concerned with how the people around you may be tracking towards achieving their goals. Instead, their only concern is with how you are tracking. And if both you and your advisor are happy with your development on your financial journey, then you shouldn’t let others’ successes detract from your own progress.
After all, everyone’s financial journey is unique to them and their particular circumstances. Set your own goals, stay focused on achieving them and be proud of how far you’ve come.
Your Overall Financial & Personal Circumstances
We touched on it before but your financial advisor is dedicated to staying up-to-date with every single aspect of your personal and financial circumstances. They know all about the secret debts you may have or the unexpected second stream of income you may have discovered, whereas your loved ones may not.
They also know what level of risk you are comfortable with in your financial strategies and have tailored your financial plan to suit it. This is extremely important to remember when comparing your financial progress to that of the people around you, as you are likely unaware of the level of risk versus returns they’re comfortable with.
Sure, your childhood friend may be currently receiving excellent returns on their investment portfolio right now, but you don’t know whether they’re invested in higher risk assets than you would be comfortable with or if they have the savings bumper necessary to weather any losses they might experience.
Remember: trust your goals and the financial plan your advisor developed specifically for you and your needs to help you achieve them.
And if you’re ever unsure about any aspect of your financial world, your financial advisor will be there to help you with professional advice and financial support designed to get you back on track.