Of course, everyone needs to learn about personal finance planning and setting financial goals, the basics of investing and personal risk management. But in the current economic and social realities, almost every one of us needs our own financial advisor. To the question “Why?” there are at least three answers.
1. A financial consultant is a carrier of the necessary knowledge
Most of our fellow citizens are very poorly versed in financial matters. Moreover, the knowledge gaps are so significant that it will hardly be possible to fill them quickly and without external support. Difficulties arise in the simplest situations: for example, with the calculation of interest on a loan – 47% of citizens are not able to calculate them correctly; or with an understanding of how compound interest works for long-term investments – here 58% are at a loss to guess. 4 out of 10 surveyed do not understand how the risk and return of financial transactions are related. That is, promises of super-high income can “turn the head” of almost half of the population! With such a scale of the problem, we literally need an “army” of professionals who can fill these information gaps – and this is precisely where I see the social role of financial consultants. A professional consultant will help the client understand the financial solutions offered by the market – whether it is health insurance or retirement savings. The important thing is that he will do this not in “theory”, but in practice, having studied the needs and financial capabilities of a particular person or his family. You can also count on the support of a consultant in related issues – for example, when receiving a tax credit.
2. The consultant will help with financial planning
The first step to building wealth – on a family, city, or national scale – is setting financial goals and creating a financial plan. A financial advisor is not a conditional “neighbor” who can envy high incomes. This is an expert who helps to understand where money comes from in the family, where it disappears so quickly, and how to make sure that there is enough money for long-term goals – educating children, getting married, and retirement. In fact, a financial consultant is a family doctor in financial matters, who is not ashamed to show his ignorance and ask for advice, you can entrust confidential information and together draw up a “treatment plan” for the family budget.
3. The consultant encourages the client to take concrete actions
A rich person is not someone with a lot of money. The one who spends less than he earns is rich. This means that he knows how to accumulate. This approach to financial management is relevant both for the family and for the country: since 2010, the average savings rate in the world has been 25% of GDP. Practice shows that methods other than personal consultation (and more often even a series of consultations, personal meetings) still do not work. This is also evidenced by international scientific research: knowledge alone, even the most profound, is completely insufficient for people to start saving up or using other financial services. But a lively dialogue, practical examples and direct provision of the service “on the spot”, with further support of the client – the format that allows you to move from words to deeds, for example, to start saving up for your retirement or schooling children.