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When does your portfolio need a review from a professional advisor?

by tavaga

Monthly Budgets, lump sum investments and continuing SIPs regularly can take your time and energy to manage. That too in this ever changing and unpredictable market environment. And hence, managing your finances and investments can seem a task after a point of time. Then comes the expertise quotient. Initially,while starting earning, it’s easy to allot your earnings into savings, investments and expenses, but as you climb the earning ladder and level up in your life, certain responsibilities follows which makes it vital to have an expert by your side to avoid any financial blunders and that’s where financial advisors make a difference. Dig in here to know what financial advisors are and when you need them the most.

What is a financial advisor?

A financial advisor is someone who’s an expert and well versed with the investments and market conditions. He/She is a qualified professional who jot downs a customised financial plan as per your earnings and future requirements keeping your risk appetite in mind. Want to know more? We’ve got you covered here.

But if you’re still not sure if you need one or not, have a look at below instances and know yourself. 

When does your portfolio need a review from a professional advisor

  1. Your investment goals have changed: 

Investments are goal oriented and should always be performed keeping the end goal in mind. But if that end goal happens to deviate, then it calls for a portfolio review. The deviation can be anything ranging from fluctuations in expenses, any unforeseen circumstance, a medical emergency or a sudden lump sum gain etc. Be it a positive gain or an emergency cash flow, any financial emergency can fluctuate the future projections and hence the portfolio must be kept aligned with the present conditions.

  1. You are paying hefty taxes: 

At the end of the year, if you notice that you are paying a hefty tax amount on your capital gains or returns on your investments, then you must consult an advisor to help you with proper tax planning with your investments. 

Moreover, when the tax regime changes and tax laws are amended relating to your particular asset class, then you must have a word with any professional to know how its going to affect your allocation and returns. Hence, in both the cases where taxation is included, an advisor can help you in a great way for saving on taxes or getting related exemptions.

  1. Uncertain market movements: 

Sudden and uncertain movements in the market or in the economy can cause an indirect impact on your investment portfolio or its components. Hence, during such market fluctuations, it’s advisable to get your portfolio reviewed by a professional advisor to anticipate any unforeseen repercussions of current market conditions on your future gains.

  1. Portfolio rebalancing:

Portfolio construction is an important step in the financial planning process to get the desired outcome later. Appropriate asset allocation across Equity, Mutual Funds, ETFs, short term funds, etc. help in diversifying risk and earn returns as per one’s risk appetite. However, asset allocation is an ongoing exercise and needs to be reviewed on an ongoing basis. Changes in the market conditions and our own financial requirements often require portfolio rebalancing. An expert’s help is often necessary to incorporate all the changes while making changes to the asset mix. 

With that being said, one can also argue that do we actually require professional help during the above mentioned instances or can we help ourselves with it? Well in that case, it’ll be a debate between DIY investing and Consulting an advisor. Let’s see who wins.

DIY Investing vs. Consulting an Advisor 

While Do-It-Yourself investing seems an easy option to the recent investors due to wide availability of information and financial influencers hacks, but still they’re confused as if DIY investing is suitable for them 

And this dilemma is a sign of more financial awareness as only a handful of investors realise that investing is much more than just starting an SIP or finding a multi bagger stock. This creates a debate as to which is better, DIY Investing or Consulting a professional help? 

Again, there’s no thumb rule for that as well. While, initial investments can be started with your personal due diligence but as the corpus compounds and becomes a hefty amount and your risk appetite widens, consider seeking an expert opinion to avoid any financial blunder and loss. Consult a SEBI trusted advisor with a good experience and past performance to trust your money with. But how to choose one? We’ve got you covered here.

How to choose a financial advisor?

Investments are anything but a standard practice. The intentions, goals and risk appetite differs from individual to individual and so does for the advisors. When it comes to consulting for investments, there are many designations that prevail in the market such as Investment advisor or Financial planners or Agents and distributors. Mind you, each of these serves a different purpose and hence, must be catered accordingly. 

Certain prerequisites and qualifications must be kept in mind before handing your investments into his hands. To make it easy, we’ve already compiled how to choose a financial advisor here

The bottom Line 

Your investment stress does not really end with consulting an advisor. The reason behind this is that at times your personal calls can’t synchronize with the advisor’s analysis and might create friction between you both. But this can be avoided by initially communicating your investment goals and then hearing their views. And only then, you can know if both of you are on the same page or not and if there are any red flags which you need to consider.

Investors need to be watchful of these red flags and if your financial advisor has exhibited any of these behaviours, it is best to have a clear conversation with them or even consider changing your advisor altogether. It is best to take help from trusted SEBI registered investment advisors who are competent and provide unbiased investment advisory services.

Investing is a serious business and having a good investment advisor is important as they help the clients develop a healthy relationship with their finances and develop a trust in the financial system.

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