How does an excellent IFA add value?

Humans are indeed their own worst enemy when it comes to investing. Also, everyone is certainly not equal regarding their financial literacy or discipline, and an excellent IFA or independent financial adviser helps you to tune out the noise, keeping you focused on sticking with your plan. It’s hard to succeed as an investor without an understanding of one’s investment psychology drawbacks. A good Independent Financial Adviser acts as a cushion between the client’s impulses or fears in reacting to the market; also, as a behavioural coach, continually reminding the client to think in ways that will help them to achieve their goals.

I Believe My Role As An Investment Adviser As Follows:

  • Helping my clients’ have focus and clarity with their long-term financial goals
  • Put a suitable and effective plan into place, one that can survive short-term shocks and volatility based on their own risk appetite.
  • As my relationship with my client grows, I ask open questions to help them understand their needs driving their fears and motivations in their relationship with money to help them have greater freedom in this area.

Sometimes a client wants reassurance and safety, and low risk has ambitious plans for an early retirement and needs to increase her pension fund sharply. Therefore, balancing a client’s attitude to risk against their capacity for loss along with their requirements to invest is not always the easiest of tasks.

I do enjoy challenging my client’s preconceptions and assumptions around their ideas of investing, helping them notice the paradoxes and contradictions. We all have our cognitive biases which can muddy the waters when it comes to clear decisions around investing.

A widespread claim of prospect theory is that people are not consistently risk averse. Yes, they are far more sensitive to losses than to gains. But they are also seeking risk, both in their attraction to long shots and in their willingness to gamble, even when facing a near-certain loss. To complicate things even further, we know that people don’t have a global view of their assets. They have separate accounts in their heads and are more willing to gamble with some of the accounts than others. To understand an individual’s intricate attitude toward risk, we must know both the size of the loss that may destabilise them and the amount they are willing to invest for a chance to achieve large gains.

Remember that by not having a clear financial plan can cause you worries; reassurance is needed around the fundamental question ‘Am I doing enough to meet my long-term financial goals?’ A great IFA in Leeds helps frame investment decisions around the long term – reminding you to invest what you can while keeping aside funds in case of liquidity needs and emergencies.

Creating A Comprehensive Plan Should Address The Following:

  • Creating clear, appropriate investment goals with realistic expectations
  • Developing a suitable asset allocation
  • Acting as a behavioural coach to ensure perspective and long-term discipline
  • Making changes to the portfolio when required – rebalancing and optimising tax planning.
  • Ongoing communication, coaching and educating as needed

Action creates clarity, and an excellent IFA will help you to build a suitable plan to work. The priority is getting you to your long term goals that count.