6 reasons to seek expert advice in domestic financial planning

How regularly should I seek services of a financial adviser? This is a common question that I usually encounter every time I organise a workshop on financial wellbeing for employees.

Many income earners are beginning to realise the significance of expert advice in achieving individual financial freedom.

Nevertheless, many employees still hold the misconception that in order to take control of personal finances, they need to consult a financial adviser every time they want to spend their money even on shopping.

Although it is a noble thing to do, it is costly. How frequent one should visit a financial adviser depends on one’s situation or the nature of one’s need, which may vary from one person to another.  Here are some of the situations that call for a financial adviser:

1. Making annual financial goals and plans. At the start of every year, most households usually draft financial goals and plans based on the previous year.

The challenge usually comes when the goals drafted either do not take into consideration the financial situation of the income earner or the resources available.

Without some financial guidance, one can either set goals that are easily achieved or beyond their reach and unrealistic. Striking a balance is usually a challenge for many income earners.

An expert guides one in formulating clear and measurable objectives as well as recognising the implications of unrealistic goals in financial plans.

This is a point where most people who seek financial advice do build the notion of incompetency of their financial consultant and part ways.

Once you have drafted your goals and objectives, the adviser should help you to assess your current financial situation to determine the likelihood of attaining the stated objectives.

After analysing your current situation, the practitioner shall come up some recommendations with various alternatives you can pursue to meet your goals, needs and priorities.

Where possible, the financial adviser will always tell whether there is any likelihood of reaching your stated financial objectives under your present financial situation or not.

2. Checking on whether you are on track. Just as a project manager may need to monitor a project for progress, an income earner must regularly check whether one is on track based on financial plans set at the start of the year.

This monitoring could be done quarterly or half yearly to assess the likelihood of achieving one’s financial goals. A financial adviser is needed given the complex nature of the process.   

Any recommendations by the adviser at this point will only work for your own benefit by helping you eliminate any financial distress due to a burnout of not attaining set financial goals or even giving up on your money plans.

3. Review your plans. Sometimes uncertainties or change in living conditions may occur midway your plans putting pressure on your finances.

This may interfere with your financial plans. However, it should not be reasonable cause to abandon your initial financial plans.

Consult a financial adviser to help you review your initial plans to take consideration of your current financial situation.

Whether you lost your job or received a pay raise, you certainly need to review your financial plans to work out on how well you can improve on them and fine-tune them to reflect the material changes in your life.  

Starting from the point of financial budgeting, you need to examine your monthly allocations to reflect current income status.  If your returns on investment are relatively lower than previous target, give it time to grow.

5. Financial discipline. Regardless of your level of income, if you cannot take control of your expenditures then consequently they will take control of you.

To take charge of your spending, consult a financial adviser to help you draft a budget plan to ensure your expenditure matches your source of income.

Each time you find yourself unable to trim your spending to match your income, consult your personal financial adviser — it is an indicator you could be living beyond your means. Lastly, do stick to your budget plan or else you may lose control of your expenditure.

The benefit of consulting a financial adviser is that you get an independent and sincere view of the recommendations on the changes you need to make to improve on your financial position.

6. Walking out of debt. Walking out of debt is the wish of many but only few do manage to the same. Becoming debt free requires guidance of a financial adviser in terms of debt management.

Just like budgeting, debt repayment must also be planned otherwise it would end up as vicious circle of debt. For instance, if you owe your bank a debt that is beyond your salary income, instead of committing your full pay to settle the loan partially, your financial adviser could guide you on how to draft a repayment plan to suit your financial situation and meet your living expenses as you repay the loan.

Borrowing elsewhere to meet your living expenditure could leave you worse off as you would need to seek help from many lenders who will add to your debt burden.

Mr Opiyo is a training manager and coach at Tolerance Employee Financial Advisors Ltd. Email: [email protected]