Just as people require regular checkups with their doctors to maintain the health of their body, so do people need to meet with their financial planner regularly to ensure the health of their financial plans. In a similar vein, doctors regularly continue their education to follow the most up-to-date medical practices and provide the most comprehensive care to their patients. Individuals follow the same path by continuing their financial education in order to make wise decisions about their future goals and interests. Instead of going to seminars and lectures and subscribing to medical journals, however, continuing your financial education can be as easy as regularly meeting with your financial advisor.
A grounding force
Some investors may make good decisions with their assets in relatively stable conditions. However, in the event of a seemingly significant market change – whether positive or negative – many are susceptible to making emotion-laden decisions and altering their investing strategy in a manner that does not align with best practice or their best interest.
For the most part, the underlying principles that guide successful investing do not change. Unless ground-breaking research rebuilds those structures, most financial planners support the pursuit of long-term goals instead of chasing short-term gains. Even if an article in a financial magazine says that now is the best time to invest more in emerging markets or high-yield (low credit quality) bonds, your financial planner can help you determine whether following such advice is best suited to your long-term objectives and offers you the appropriate balance of return and risk management.
Responding to changes
Of course, the long-term nature of best practices for investing hardly means that your overall financial strategy does not need to be updated periodically. Financial plans involve not only investment portfolios, but estate plans, risk management and insurance, tax planning and providing for education and retirement. If, for instance, your will and/or trust has not been revised in five years, it may be based on tax laws that have changed significantly, or perhaps some of your beneficiaries are now deceased or your financial circumstances have changed in other ways. If any of these examples are true, your previous estate planning strategy may not be as effective today and may need to be revised.
Informing your own research
Of course, you may have access to much of the same news, research and statistics as your financial planner. With today’s widely available amount of information, it’s not surprising for you to have heard about the same trends as your advisor. While gathering your own data is helpful, a knowledgable financial planner can point you to the most reputable sources and help you distinguish useful news and information from those that may be questionable or not well-suited to your financial circumstances. They can give you the kind of educated and individualized financial advice that no website, magazine or newspaper can offer.
Whether your financial circumstances and goals are changing or remaining relatively stable, you need to regularly check on the health and well-being of your financial and investment strategies. Financial planners are your guide to maintaining a healthy financial lifestyle.
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