We approach a specialist when something is beyond our understanding or scope to work around. When nothing works, we seek an expert, don’t we?
In the same way, investing is one area that is best left to experts unless one can give that much time and resources to do the work independently.
They offer multiple services when considering a financial advisory to navigate the investing world. Here’s what you can expect from a reputed, registered advisory:
Portfolio Management Services: By taking charge of the client’s wealth, a financial advisory’s portfolio management services help maximize returns and minimize risks by monitoring their portfolio. An advisor makes strategic decisions concerning asset allocation, stock selection, and exposure to a sector while keeping the client’s financial goal in mind.
Financial Planning: This service pertains to developing a financial plan comprising specific strategies to achieve short-term and long-term financial goals
Investment Advisory: A financial advisory recommends specific investment avenues after assessing the client’s risk appetite, time horizon, and investment goals.
Estate Planning: Here, an advisory offers expertise in creating a strategy for smoothly transferring wealth and assets to heirs or beneficiaries.
Tax Planning: It is a specialized service that aims to identify and take advantage of lucrative strategies that offer tax credits and deductions while managing capital gains and losses to minimize tax liabilities.
Risk Management & Insurance: This service offers consultation on the choice of life, health, and disability insurance to safeguard clients from unforeseen events that can impact their financial well-being.
Education Planning: Here, advisory services render important advice regarding tax-advantaged savings plans that help fund college education and higher studies.
Cash-flow Management: By helping clients develop budgeting and cash flow strategies, organizations can meet their obligations while being able to save and invest.
Investor Education: Advisory services also aim to educate clients by passing on relevant information regarding finance fundamentals, investing, strategies, and market trends.
How Does a Financial Advisory Help Enhance the Portfolio?
Now that we know the services an advisory offers, we should know the factors that enable it to add value to the portfolio. The following are the factors that make financial advisories a sought-after service:
In-depth Market Knowledge: A financial advisory comprises finance professionals with expert knowledge of finance and investing. These professionals combine their knowledge of company fundamentals, market trends, the present economic scenario, and the likely situation that will unfold, given the domestic and international factors, to identify attractive investment opportunities. Possessing accurate information and the judgment to use it at the correct time is where the expertise of a financial advisory comes in.
Personalized Investment Strategies: Personalized investment guidance is another important factor contributing to the portfolio’s overall quality. It considers a client’s unique financial goals, risk tolerance, and investment horizon. A financial advisory also considers a client’s needs, such as seeking long-term capital appreciation, regular income, or any other goal. It helps them strategize their investment to meet these goals.
Active Monitoring and Adjustments: The stock market can be a complex game for some, as the prices fluctuate continuously in response to several factors. These dynamics sometimes warrant real-time adjustments to the portfolio. In such times, advisory services are better positioned to know about the developments, take a holistic view, and execute the required changes to the portfolio.
Diversification: One of the fundamentals of building a portfolio is the principle of diversification. Owing to their astute knowledge of finance and investment, they can help you pick the right sectors, industries, and asset classes to maximize returns and minimize the risks arising from exposure to risks inherent in individual stocks and sectors. Doing so also helps the portfolio bounce back after downturns.
Risk Management: An advisory assesses a client’s risk tolerance and creates a portfolio aligned with their needs. Their expertise helps the client construct a portfolio that is the right balance of risk and reward. Hence, given the client’s risk tolerance and unique goal from investing, an advisory firm can enable the client to enjoy the benefits of earning returns while also playing safe.
Access to Research and Information: Advisory services have the upper hand when accessing information and some research tools that individual clients do not have. It is because they are registered with the relevant apex body that governs securities markets. Armed with extensive knowledge and research tools, they can effectively churn the portfolio as required while keeping the client’s goals in mind.
Long-term perspective: Advisory services generally encourage clients to invest for the long term. This strategy is another way to enhance the portfolio as it aligns with the historical trend of rewarding patient investors through market cycles.
There are many financial advisories offering financial services. As an investor, always be alert and ensure the advisory is SEBI-registered. Also, study their experience and expertise.
Research and Ranking, a part of Equentis Wealth Advisory Services Private Limited, is an independent research & equity advisory firm. The company assists investors in building a well-diversified portfolio by providing them with personalized guidance on the stocks to pick on their investment journey.
The art of stock selection results from carefully balancing several factors and using one’s knowledge to enable a client to navigate the investing world. A financial advisory is better equipped to help clients get started and hand-hold them through the process or completely manage their wealth. Thus, the role of registered advisories is indispensable as they offer guidance and stability in the vast world of investing.