Necessity for a Mutually Beneficial Relationship Between the Advisor and Client

Advice / Finance and Investing

Necessity for a Mutually Beneficial Relationship Between the Advisor and Client
Olufemi Feyisitan , Partner, Nigeria

As the client-advisor relationship deepens, the advisor might ultimately be in position to render advice on issues of both a personal and financial nature as the client proceeds through lifetime events..

Economic development, growth and government policies are issues that are continuously being formulated and re-formulated subject to a lot of factors e.g. government policy, market trends, socio-political climate, distribution and availability of natural resources etc. These changes can be favourable or adverse in-terms of impact on debt eradication, wealth creation and management depending on the form and proportions in which the individual holds wealth.
It is the primary function of the advisor and wealth manager to assist clients in debt reduction, including growth and protection of wealth through the various undulations of the economic cycle. Therefore, the ability, detailed knowledge of and utilization of investment products and services efficiently, forecasting future possible events, risk reduction tactics and the seizures of opportunities to grow wealth are necessary skills.
Today’s markets need to be approached with extreme caution. The widening range of financial markets and instruments has put sophisticated investment products and techniques beyond the capacity of amateur investors i.e. the variety of financial products and services available is quite diverse and can be confusing to the un-informed investor or client. Nevertheless, there is a need to plan for future and unforeseen circumstances. These amongst other reasons makes it important for both the client and advisor to pick and choose financial products and services that suit the specific risk appetite, investment horizon, income and safety requirements of the client.
It is advisable that the client respond to the advisor as a guide through the investment jungle, looking to him or her as a resource tool for sorting myriad information available. This involves discarding so-called `junk knowledge` and application of the relevant to prevailing circumstances.
The advisor in-turn should as a relationship building tool teach, guide and explain or clarify opaque issues related to investing and investment products, if the client so desires. The advisor should verbally impress upon clients the reason d`etre for financial planning i.e. the advantage of investing piece meal over a long period can serve as a mitigating factor to fluctuations in the market and less of a drain on resources, in comparison to a one time lump sum investment for clients.
Fixed income, equity and non-conventional investment products have specific applications in the construction of a financial plan. The financial plan is a function of investor or unique client circumstance, serving as a road map to the achievement of set goals and objectives.
Unique circumstances that could impact the financial plan include such issues as age, marital status, number of children, saving for college education, time to retirement, birth of a new born or the untimely demise of a loved one, health care needs, sudden job loss etc. This situation has led to the increasing need for sophisticated investment management and formulation of a plan to achieve goals and objectives. Necessitating, the need for a Financial Advisor; whose specific duty is to understand unique circumstances of the client and provide suitable services and products for achievement of goals. Implied from the above is the prior setting of goals and objectives whilst, understanding constraints and the client's ability to take on risk.
Effectively, as the relationship deepens the advisor might ultimately render advice on issues of both a personal and financial nature as the client proceeds through lifetime events. .

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Other Views by this Author: Religion, Faith and Dogmatic Thought Modes | Personalities & Compartmentalisation in the Client-Financial Advisor Relationship

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