Why getting financial advice is a lot like seeing a doctor

 
 You need to visit your financial advisor to check whether you are on the right financial track and to be able to adjust according to market conditions. Fotosearch

In the course of my work, I have gathered that most of the participants who seek debt counselling services have switched financial advisors in less than a month and none has dared to implement recommendations given to their entirety.

Majority of those who seek financial advice often think that this is a process that gives instant outcomes.

But just like medical consultancy, the outcomes of financial advisory are with the recipient. Below is how financial advisory is analogous to medical advisory;

Information disclosure is fundamental. The initial step in financial advisory begins with the supply of data to the practitioner. This is usually where most people fault by being reserved when giving information.

Just like in medical consultancy, supplying limited information will not give the practitioner a clear picture of your situation and, therefore, any financial recommendation offered may not work for you.

If your reservation is due to mistrust, halt until you get an advisor you can trust lest you will not get value for your money.

The data you required will touch on personal and financial goals, needs and priorities, expectations and time horizons amongst others.

Analysis and evaluation of situation and symptoms. Even before giving any recommendation, the practitioner will analyse information supplied and assess your current financial situation to determine the likelihood of you attaining the outlined objective.

During this time, the practitioner will take a break to do research, consult various books and study market trends. It is the length of this process that will determine the duration of engagement.

Recommendation is not universal but based on one’s situation. The financial advisor will come up with recommendations on alternatives you can pursue to meet your goals.

Some of the recommendations will involve buying specific products, for instance insurance covers, or a change in lifestyle — like controlling your monthly budget to live within your means.

Purchase of financial products without advice is not healthy. Any purchase of financial product or investment without consulting a financial advisor may be detrimental as it may worsen one’s financial situation.

For instance, before investing in the stock exchange, most first time investors are advised to contact financial or investment advisors to assess and ascertain whether their risk tolerance matches the risk involved.

Consequently, any investment in the stock market devoid of assessment of risk tolerance will lead to “emotional investing”, which may result in erosion of capital or low rate of return on capital.

Success relies on the discipline of the recipient. You need to visit a practitioner regularly for him/her to monitor progress. Most financial advisors will tend to charge additional fees for this.