Why You Should Not Use A Financial Advisor?
It is important for a client to consider the specific reasons why they want to work with a Financial Advisor and how this will benefit them most. Success is not always achieved just by hiring a professional, though persistent marketing in the industry might suggest otherwise.
Investors may be able to perform just as well managing their own money without any high fees attached. Here are some important aspects to consider that might prove a better choice for the client to work without a Financial Advisor:
1. Advice vs promises:
The client cannot rely on their Financial Advisor to make steady and guaranteed decisions for success. Although large-cap fund managers are elite professionals in the business, they cannot predict how to beat the market. They will offer advice and serve as a coach, talking the client through difficult decision-making based on their own knowledge, but they do not hold the responsibility for decisions that are not successful. It is important for the client to decide if this advice is worth paying for.
2. Fees will not be altered:
When the client decides to work with them, they agree the fees that will be paid to the Financial Advisor for their services. Whether the client gains or loses the money they have entrusted in the process, the Financial Advisor will still receive the fees agreed early on. It is, of course, in their best interest to perform well and grow the client’s wealth, but unnecessary risks and expenses to the investment strategy must be considered in case it proves not to be successful. The Financial Advisor fee remains the same regardless whether it a gain or loss.
3. Potential higher returns with FTSE 100:
The client should consider putting all of their money into the FTSE 100, which will almost always yield higher returns. This success, however, is based on the high-percentage fees that Financial Advisors charge their clients, and may be able to perform better than the FTSE 100. It is worth the client assessing it by subtracting the suggested fees charged in the investment versus investing directly into an index.
4. Invest in individual companies:
If neither the FTSE 100 or Financial Advisor options suit the client, they might consider choosing high-quality individual companies to buy and the client will perform the same role as the Financial Advisor would. It saves the client on fees and they tend to have their own freedom, not being restricted by other requirements from the Financial Advisor. This is an effective investment strategy, also allowing the clients the freedom to keep control of their money until the opportunity to buy the chosen company arises at an attractive price.
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