What is financial advisory?

We often get this question about what it is that we really do. Often, what we do is confused with other disciplines within our sector. So let’s start by talking about what we are not.

Portfolio Management

Portfolio managers or asset managers are experts in stock selection as well as fund collation. In simple terms, they decide which shares, bonds, property stocks to invest in (or not) on the stock market. They also make decisions around the weightings of these various instruments within a basket of products (otherwise known as funds/unit trusts/portfolios). They create various funds based on criteria such as investment term (short term, medium term or long term) and risk profile (cautious, moderate, aggressive). These funds are then made available through various platforms for investors to invest in.

Stock Broking

Stockbroking is the physical buying and selling of shares/bonds/listed properties on behalf of retail clients (you and I) or institutional clients (portfolio managers) clients for a fee or commission.

Financial Advisory

As you are well aware, there are literally hundreds of shares listed on the stock market and thousands of unit trust funds available to investors both locally and offshore. As an average investor, it is often difficult to decide which ones to invest in. That is when you would employ the services of a financial advisor.
Your financial advisor’s job is to do the following:

  • Understand who you are (your aspirations, your fears, history with money, what you do for living, how you’ve amassed your wealth etc).
  • Understand what your goals are (are you saving for a holiday, do you want to retire early, do you want to adopt a baby in 5 years etc).
  • Assist you in ordering your goals in terms of short term, medium term or long term.
  • Assist you in attaching a financial value/price to your goals.
  • Assist you in creating a plan (road map) that will assist you in reaching these goals.
  • Ultimately assisting you regarding how your funds should be invested (shares, bonds, properties, offshore etc) in a way that will assist you in reaching your goals. This is when the services of a stock broker or portfolio manager are required.
  • Ensure that you stick to the plan that has been created for you by checking in with you on a regular basis regarding this.

The discussion around market performance and stock selection is not the primary concern of your financial advisor. Their primary concern in ensuring that you understand what the goal is, you understand the plan to get you to the goal and that you stick to the plan over time.

Have a good week!

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