The figure of the financial advisor is becoming more topical, even more so when the economic situation becomes more adverse.
- In essence, he is a professional who helps you manage your economy according to your income, assets and needs that you have. In other words, it is in charge of managing financial operations on behalf of its clients.
- Below, you will find the answers to these questions to learn about the benefits of hiring a financial advisor and how it can help your personal finances.
- Discover more stories at Business Insider Spain .
The figure of the financial advisor is becoming more topical. Even more so when the economic situation becomes more adverse. Not everyone has the right knowledge to run a proper economy and therefore receiving external recommendations can promote greater health of personal finances.
But… what does a financial advisor really do ? In essence, he is a professional who helps you manage your economy according to your income , assets and needs you have. In other words, it is in charge of managing financial operations on behalf of its clients. He is the person who will help you achieve your goals. To manage your savings and be able to grow your capital.
It is not someone who tries to sell you certain products , but is in charge of advising you to find which of them best fit your profile. Fundamentally, it helps to better manage all the resources and that you can achieve that financial freedom that you long for .
However, many questions arise around this professional, such as: What are the types of advisors? Can I afford to pay for your services? How can your contract benefit me?
Below, you will find the answers to these questions to learn about the benefits of hiring a financial advisor and how it can help your personal finances.
Types of financial advice
Getty Images
The types of financial advisor should be divided into two mainly:
- Financial Planner – Focuses on helping you make a plan to pay off debt, save for, or invest for retirement. And if you have a particular financial need that requires a specialist, such as a lawyer, they will find it for you.
- Investment Advisor – Many people do not understand the difference between financial planners and investment advisors. However, an investment adviser has a different, much more specific job. While financial planners see the big picture, they focus solely on helping their clients choose the best investment options.
Likewise, in Spain there are the figures of the EAFI (the acronym for Financial Advisory Company). They are companies whose success is based on independence, since, by not having their own products, they avoid any conflict of interest in advising. They issue, on their own initiative or at the request of the client, personalized investment recommendations in financial instruments.
How much does a financial advisor cost?
Getty Images
Many people believe that they cannot hire a financial advisor, because it is a service only for large capitals. But, in reality, there is also the possibility of getting advice, even if you are a small saver and do not have a great wealth . So much so, that every time we contract a product at the bank we are paying a small percentage for contracting the service. For example, in mortgages.
What the advice service costs will depend on the complexity of your financial situation and the specific work that is carried out. It is the same that happens with any other professional activity.
In this sense, there are different ways to pay the financial advisor. These are the most common:
- Flat rate: The adviser charges an amount for his services periodically, and offers his clients an advisory service without any type of limit. Prices vary depending on the complexity of the services provided.
- Payment per hour worked : It works the same as with lawyers, for example. When the services that the client needs are complex, this is the system that is most commonly used.
- Percentage on the advised capital : It is usual that it starts at 1.5% for small assets and is reduced as the assets increase, even reaching 0.10% or 0.15% for large capitals.
- Setbacks : This is what has to be avoided whenever possible. This way means that the advisor is not paid by the client, but receives commissions from the manager or bank from which he has sold products.
Why do you need a financial advisor?
Rawpixel / Pixabay
In short, the last question you probably ask yourself is why you need financial advice and how it benefits your economy. These are the main advantages it has in your personal finances.
- Put your wealth in order : They detect problems in money management, know your capital flows and know how much money you have and how you are spending it. In short, if your financial health is optimal or not.
- Organize your savings . In other words, start building an investment portfolio or investment plan that suits your profile and needs.
- Make your heritage profitable . Get the maximum benefit from your money, always depending on the goals you set for yourself and the risks you want to take.
Likewise, the figure of the advisor will help you in terms of personal and professional stability. Knowing that your money is in the hands of a person with extensive knowledge in finance generates greater peace of mind. It will save you time, since you will be able to focus on other issues that are not directly related to the investment and it will make you better aware of your consumption habits.
