With a good financial advisor, you’ll never have to work again
Before you quit your job and buy that Ferrari, hold on. We don’t mean you’ll get to stop working and start YOLO-ing tomorrow.
But that’s the point. A good financial advisor doesn’t give you false hopes. Instead, they help you plan a path towards financial freedom – one that’s based on your income, responsibilities and lifestyle – so that one day (in the not-so-distance future), you can really click “send” on that resignation letter and live a financially free lifestyle!
However, choose wrongly and your finances – and your family’s aspirations – could forever remain a distant dream (or worse).
These are the five biggest mistakes we commonly see, when people choose their financial advisors.
Mistake 1: Picking a friend or relative, simply to show your support
It’s an unfortunate fact that most Singaporeans never really “choose” their financial advisors – instead, their financial advisors choose them.
This happens when a friend, family member or relative joins the profession and asks their closest contacts to purchase investment or insurance-related products from them – the person agrees, and a client-advisor relationship is formed.
While we’re not opposed to having a close friend or relative be your financial advisor, you should engage them for the right reasons. They should get to know your financial goals, recommend solutions that are best for you (and not simply products that they’re selling), track your progress towards those goals, and make sure you’re progressing at the right pace.
Always choose your financial advisor based on their competency and track records (i.e., do they have many positive client testimonials?), rather than simply friendship or kinship.
Mistake 2: Choosing a financial advisor who doesn’t take a holistic view to financial planning
Financial planning is both an art and a science – most importantly, it’s about gaining a 360-degree view of your money, then planning how you can use your finances to achieve your financial aspirations. These aspirations can be planning for a home, your children’s education, creating recurring income, your retirement, leaving a legacy for the next generation, or more.
There are a lot of moving parts to consider – including your income, financial responsibilities, protection needs, your family’s needs, and of course, your aspirations and desired lifestyle.
A good financial advisor looks into all these areas of your life – as well as your psychology towards money – and creates a personalised financial plan that’s tailor-made for your financial goals.
Good financial planning is NOT simply selling you products that the advisor carries or represents. In fact, a common issue that people have is that their financial advisor only recommends a very limited selection of solutions to them.
Why?
Because their insurance agent pushes insurance-tied products to them, while their banker only sells specific investment products that their bank carries. If this is what’s happening with you – you’re buying what you’re sold, not what you need.
To truly optimise your finances, consider working with a team of specialists to get the best advice in every field. For example:
- Investment managers to handle your investments
- Accountants to optimise your taxes
- Trustees for estate and business succession planning
- Mortgage loan specialists to reduce the interest on your mortgage
Or you can work with a financial advisor (or team) that has access to these specialists, and can give you the holistic financial advice you deserve – creating an all-encompassing strategy of wealth protection, wealth accumulation through diversified investments, retirement planning, legacy planning, and more.
Mistake 3: Limiting your options
A lesser-known aspect of financial planning is that separation of independent and tied financial advisors.
Here’s what these terms mean:
• Tied advisors:
- These are agents or financial advisors who are tied to specific financial institutions (i.e., an insurance company or bank)
- They are remunerated by the institutions they are tied to, and are incentivised to sell products
- Because of this, they only promote the products that their companies sell
• Independent advisors:
- Independent financial advisors are not tied to any financial institution
- They carry products and plans from varied sources, and can offer you solutions that are best suited for your needs
- They are remunerated by fees paid by clients, so their loyalty lies with you
- Experienced financial advisors also recommend strategies that don’t earn them any commission or benefit (like including property investments into your wealth growth strategy, if applicable to your situation), as they are not incentivised to simply sell products
Mistake 4: Not having a proven strategy for protecting and growing your wealth
As financial planning professionals, we often see prospects who tell us how they had previously invested years of their savings in an ad-hoc manner, into random products – all the while, never having an actual strategy for protecting and growing their wealth in the long term.
We believe that your wealth journey should have elements of wealth protection, accumulation, enjoyment, distribution and retirement – in that specific order. At Soul Wealthy, we call this our “4 Taps Strategy”.
If your financial advisor seems to be recommending the “newest and best product” available every time, without considering how the product will add (or subtract from) your long-term wealth journey – those are recommendations that are being made without your best interests in mind. (And as experienced industry insiders, we understand why it happens – often because the agent may be trying to meet their short-term sales targets.)
Your financial advisor should have the experience and “battle scars” to help you navigate through the personal and financial crises that everyone will go through at some point of their lives – whether it’s brought about by personal issues or a global financial crisis. If your financial advisor has guided others through these tough times, you can likely count on them to help you through those situations, too.
Mistake 5: Not “shopping around” before sticking to a financial advisor
As discussed earlier, many people choose financial advisors based on kinship or friendship – and never really “shop around” for an advisor that’s qualified to plan their life’s financial adventure.
You’ve probably considered multiple alternatives before choosing an interior designer, your job, or even which store to buy your laptop from – so why not spend some time choosing a financial advisor that has the expertise lead you towards a lifetime of financial freedom?
Remember, you should never feel obliged to purchase an insurance plan or make an investment, simply because a financial advisor or agent has spent time talking to you. (That’s their job, after all.)
This is your decision to make, and you have to be comfortable and confident with your financial strategy.
Plan your financial journey with us
Interested in a complimentary consultation with an experienced financial advisor from Soul Wealthy? Connect with us and see if we’re the right fit for you – with absolutely no obligations.
