A professional who suggests and facilitates financial services to clients based on their financial situation
A financial adviser is your planning partner. To accomplish your goals, such as retiring in 20 years or sending your child to private education in 10 years, you may need a skilled professional with the required qualifications and experience to help make these plans a reality, and that is where a financial adviser can help.
A Financial Advisers many roles
Together, you and your adviser will cover many topics, including the amount of money you should save, the types of accounts you need, the insurance you should have (including long-term care, life protection, and disability insurance) and estate and tax planning.
The financial adviser is also an educator. Part of the adviser’s task is to help you understand what is involved in meeting your future goals. The education process may include detailed help with financial topics. At the beginning of your relationship, those topics could be budgeting and saving. As you advance in your knowledge, the adviser will assist you in understanding complex investment, pension, and tax matters.
Step one in the financial advice process is understanding your financial health. You cannot properly plan for the future without knowing where you stand today. Typically, you will be asked to complete a detailed written questionnaire and your answers help the adviser understand your situation and make certain you do not overlook any important information.
The Financial Questionnaire
The adviser works with you to get a complete picture of your assets, liabilities, income, and expenses. On the questionnaire, you will also indicate future pensions and income sources, project retirement needs and describe any long-term financial obligations. In short, you’ll list all current and expected investments, pensions, gifts and sources of income.
The investing component of the questionnaire touches upon more subjective topics, such as your risk tolerance and risk capacity. An understanding of risk assists the adviser when it’s time to determine your investment asset allocation. You will let the adviser know your investment preferences as well.
The initial assessment also includes an examination of other financial management topics such as insurance issues and your tax situation. The adviser needs to be aware of your current estate plan (or lack thereof) as well as other professionals on your planning team, such as accountants and solicitors. Once you and the adviser understand your present financial position and future projections, you are ready to work together on a plan to meet your life and financial goals.
Creating the Financial Plan
The financial adviser will collate all of this initial information into a comprehensive financial plan that will serve as a roadmap for your financial future. It begins with a summary of the key findings from your initial questionnaire and summarises your current financial situation, including net worth, assets, liabilities, and liquid or working capital. The financial plan also recaps the goals you and the adviser discussed.
The analysis section of the report will include your risk tolerance, estate-planning, family situation, and other important present and future financial issues.
Based upon your expected capital value and future income at retirement, the plan will create simulations of potentially best and worst case retirement scenarios, including the possibility of outliving your money, so steps can be taken to prevent that outcome. It will look at reasonable withdrawal rates in retirement from your portfolio assets. Additionally, if you are married or in a long-term partnership, the plan will consider survivorship issues and financial scenarios for the surviving partner. After you review the plan with the adviser and adjust it as necessary, you are ready to implement the recommendations.
The Role of a Financial Adviser
The Key Points
MWA Ltd is registered in England and Wales.
Company Registered Office: 17 Mary Vale, Godalming, Surrey, GU7 1SW.
Company Registered Number: 5040142
MWA Ltd is an appointed representative of ALPs FS Ltd, which are authorised and regulated by the Financial Conduct Authority.
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