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Financial Advisor Myths

 

Financial Advisor Myths

 

There are a many Financial Advisor myths out there that may prevent you from working with one. These may either come from your self-perceived viewpoint (how you personally feel about Financial Advisors given your own interpretation or impression of them), or a misconception based on external factors such as things you have heard from a close friend who maybe had a bad experience, or that it is better to go at it alone, or maybe that you would prefer a stranger not to handle your hard-earned money.

 

This would no doubt leave you feeling hesitant about working with a Financial Advisor, but remember, a good Financial Advisor’s objective is help you financially, to understand your needs and put together strategies to help you reach your financial needs and goals.

 

Nowadays trust is also hard to come by, and because trust is usually earned over time, we thought we’d debunk a few financial advisor myths to help you earn our trust to hopefully change your mind and leave you feeling more confident in engaging with a Financial Advisor.

 

 

 

Myth #1: I need a lot of money to work with a Financial Advisor

 

Fact: This is not necessarily true. A Financial Advisor can still work with you even if you don’t have many assets. Although your choices may be limited, you can still be assisted on a fee-based/hourly basis with things like budgeting, financial planning, help you set up a monthly Savings Plan and assist with ongoing monitoring and management, understand a workplace retirement plan and assistance with your pension options when moving from job to job.

 

 

Myth #2: A Financial Advisor will put all my money into risky stocks

 

Fact: A good Financial Advisor will never just throw all your money into stocks alone. A good Advisor will always assess your attitude to risk first to determine your risk profile and then make sure that your investment strategy aligns with your long-term goals and objectives. When constructing a portfolio, asset class diversification (Equities, Bonds, Property, etc) is key to smoothing out your returns as one asset class may perform differently to another under certain market conditions, therefore, effectively managing investment risk.

 

 

Myth #3: I need an Advisor local to me to meet in the office

 

Fact: Modern technology makes it convenient and easily accessible for clients to communicate with Financial Advisors through the likes of Zoom (video calling), email, and web applications to assist with filling out and signing e-documents. This is especially true for Financial Advisors like us, who have clients all over the country. This actually works in favour of clients as they need not spend €100 on petrol driving hundreds of kilometers and use up 3 hours of their own precious personal time.

 

 

Myth #4: A Financial Advisor is too expensive

 

Fact: Financial Advisors usually charge an initial commission, an ongoing (trail) commission, or a combination of the two. It really depends on your needs, the product/service and what you are looking to achieve. When it comes to crafting a Financial Plan, Advisors can charge a financial planning fee based on hours of work put in. Here, if its a case of the client signing up for a product to support the plan (i.e., a Pension as part of a retirement plan), the Advisor can decide to waive the financial planning fee and instead be remunerated by the product provider.

 

That being said, an honest Financial Advisor who acts with integrity in all their dealings should never take fees or commission where it is not due. A good Financial Advisor will also be worth more than the fees they charge, and do their best to make it affordable for you. As mentioned in the Vanguard report, with the help of Financial Advisors, investors gained around 3% per year in value for their investments over time, compared to what they would have gotten if they had not used an advisor.

 

 

Myth #5: I have no need for a Financial Advisor – I can do it all myself

 

Fact: Yes, there are many people that are certainly capable looking after their own finances, however, research by Royal London showed most people feel more confident about money and financially better off when they do get advice. Additionally, like many professions, Financial Advisors make use of a full suite a tools, and informational sources to serve clients effectively and provide positive outcomes in their money trajectory for the future.

 

 

Myth #6: I don’t trust handing my money over to a Financial Advisor

 

Fact: Simply put, a Financial Advisor will never have access to your funds. You are in control of your money at all times. An Advisor, in this case, can only recommend or advise you where put your money.

 

For example, say you want to invest a lump sum of €10,000, and the Advisor recommends investing your money in Zurich’s XYZ fund. Zurich as the custodian (financial institution responsible for holding your money) will create an account in your name for which you can have access to and manage online. The Financial Advisor is your point of contact but does not hold your money – you are in control!

 

 

Outcomes of working with a Financial Advisor

 

1. Wealth: Advised clients build more wealth and have greater net worth over time.

2. Achieve your Goals: Those who work with Advisors are more successful at achieving meaningful goals.

3. Retirement Savings: Clients who work with Advisors are far more likely to have sufficient savings at retirement.

4. Confidence: Financial plans and advice will keep you better informed when making financial decisions and will leave you more confident in your financial future.

 

 

Where to find us

 

Locally:

If you are looking for a Financial Advisor near you, you can locate us at the famous Walkinstown Roundabout in Dublin 12.

Address: Greenhills Centre, Units 1 & 2, Greenhills Rd, Walkinstown, Dublin 12, D12 YH22.

 

Nationally:

If you are based outside of Dublin, we have Financial Advisors located in Co. Wicklow and Co. Cork (Munster), who would be happy to commute to you.

 

Click on the map below for directions to our offices…

 

Financial Advisor near me

 

 

Need to speak to a Financial Advisor?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Day Trading or Long Term Investing?

 

As Financial Advisors we deal with a broad range of clients on an ongoing periodic basis who have various objectives and goals. Since the COVID-19 outbreak we have seen a meteoric rise in younger clients asking us for advice on whether they should go about Day Trading or Long Term Investing. Clients whose age demographic aren’t usually in tune with the financial world are becoming more and more interested in beginning their investment journey.

 

This is brilliant, as we all know, investing early and putting money away at a young age is the single greatest step you can take on your journey to a financially successful future. Taking advantage of compounding interest effects, long term investment horizons and reduced spending habits have caused a tidal wave of change.

 

Rise of the Day Traders

 

Online trading apps and platforms which we have all come to know, have helped increase the appetite for expediency among the younger generations. Slick interfaces, low charging structures and quick account setup times have opened the markets up to many. On the face of it, this is great, undoubtedly so.

Day-trading

 

The introduction of a new generation of investors into the marketplace now can reap all the rewards investing has to offer. Only the fact remains that many investors entering the investment landscape have done so with little to no previous experience. One key change is happening, many investors are interpreting “long-term investing” as “day-trading”. Day-trading should not be confused with long-term investing.

 

Day trading, as the name suggests, involves frequent buying and selling of stocks or investments on the same day. When the market opens, so begins the buying and selling. When the price of a stock changes to a point that is deemed favorable, the trader can make a profit, sometimes small, sometimes substantial depending on the stock and market price.

 

Pros

  1. Quick to set up an account, and low charging structures (depending on the platform).
  2. Little capital (money) required to maintain a daily account balance to trade.
  3. Significant gains can be made with the right trades over a short period of time.
  4. Disciplined and dedicated investors can be highly successful with the right financial analysis tools and a good understanding of how the markets work.

 

Cons

  1. More capital (money) required for those who wish to trade more frequently throughout the day.
  2. Hefty fees or commission may be deducted from profit made from each trade, sometimes costing you more.
  3. Trading most often requires a lot of time and attention, at least two hours each day. For the serious traders, around five hours each day.
  4. Running the risk of over-trading and doubling down on potential losing trades.

 

Long Term Investing

 

Long-term investing is known as the more prudent approach for investors. This method involves the buying and selling of investments over a period of years, usually longer than three to five years. Here, the investor will approach an investment company and sit down with a Financial Advisor to have a conversation about his or her plans for the future and what goals they aim to achieve in the long term. Why is this regarded the more prudent approach?

Long-term Investing

 

Its about planning for the bigger picture. A Long-term investor will often use this route with the intention to realize sustainable returns over a period of time and will rely on professional fund managers to actively monitor and manage the stocks on your behalf (at a reasonable charge).

 

The Advisor will take into consideration the investor’s personal and financial circumstances, assess and calculate the investment time horizon (term) and the level of investment risk he/she is prepared to take and that is required, and based on these factors, put together suitable investment solutions to achieve the investor’s goals or objectives. 

Pros

  1. Option to invest a small amount regularly (monthly), or a larger one off investment.
  2. Asset class diversification to effectively manage investment risk (Equities, Bonds, Property, etc).
  3. Commission and charges are disclosed upfront and transparent to the investor. Financial Advisor fees can be negotiated.
  4. Suitable for investors who wish to invest long term and to achieve future financial goals.
  5. The outcome of staying disciplined and invested in the market over time (riding the waves of short-term volatility) has historically delivered positive and consistent “compounding” returns, with the investor always coming out on top.

Cons

  1. Financial Advisor fees, fund management charge, fund switches and trading costs apply (usually offset by fund performance over time).
  2. Not suitable for impatient investors who are looking for immediate returns.
  3. Historically, markets have been impacted by periods of downturns (capital at risk). Investors can make the mistake of selling out of the market, locking in investment losses.

 

What route should I take?

 

The key difference between day-trading and long-term investing is that one requires skill and attention, and the other simply requires patience. It really depends on your personal investment objectives, the amount of capital you have, your attitude to risk, and how much time you wish to dedicate to it. Many investors choose one or the other, some choose to incorporate both methods as an investment strategy. Its important to consider that you should never risk what you cant afford to lose. This is why it is recommended to assess your attitude to risk, and match the appropriate investments to your personal risk profile.

 

We therefore urge anyone who plans to focus their sole investment and retirement strategy on an online trading platform to do the proper research and due diligence that such an undertaking demands from you. If done right, this can provide great results. 

Contact us for Financial Advice

 

Whether you plan to incorporate trading in a personal capacity with other investment strategies or plan to go it alone it is always worthwhile receiving impartial financial advice first.

 

Chat to the team at Smart Financial today!

 

      Drop us a call here   

 

Or leave your details below and we will get in touch with you…

 

 

Where to find us

 

Locally:

If you are looking for a Financial Advisor near you, you can locate us at the famous Walkinstown Roundabout in Dublin 12.

Address: Greenhills Centre, Units 1 & 2, Greenhills Rd, Walkinstown, Dublin 12, D12 YH22.

 

Nationally:

If you are based outside of Dublin, we have Financial Advisors located in Co. Wicklow and Co. Cork (Munster), who would be happy to commute to you.

 

Click on the map below for directions to our offices…

 

Financial Advisor near me

 

 

Need to speak to a Financial Advisor?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.