I’m often amazed at how far we humans have come in the digital age. My grandparents were still excited about astronauts defying gravity, escaping our planet and landing on the moon. But wow, we’ve got the globe in the palm of our hands by way of wi-fi and cell phones. It’s hard to remember how we banked and communicated before we had smartphones and WhatsApp.
Robo-advice is another reality of our times. Many financial services companies give clients the option to buy financial products online. Clients answer a few questions, and with very little effort, they are guided to a product. It’s quick and so convenient.
And let’s be honest, many people are scared to trust financial advisers. Don’t they charge a lot of money? Aren’t they just for rich people?
Robo-advice is a great option for people who know what they want and how much risk they can handle. Nobody can predict the markets, and I, for instance, got a big fright in 2008 when a housing bubble in the United States and outrageous risks by global financial institutions caused a major meltdown worldwide.
People who study our money behaviour, talk of “risk tolerance”. It is widely accepted that you will get better growth on riskier investments. It’s safe to keep your money in the bank, but the growth is rather low. Shares may grow much faster, but will you drop your investment like a hot potato when markets fall?
If one is not that informed about the world of investments, a financial adviser can open your eyes to options best suited for you.
I have worked with a lot of financial advisers in my life, and of course, one comes across ones who are more interested in a commission than in helping their clients. I have, however, come across hundreds more who are recommended by their clients because their investments have benefited from the adviser’s superior knowledge.
A qualified financial adviser can help you with the following:
- They know where and with which of your needs you should start: Medical aid or car insurance?
- They listen to how nervous you are about losing money and can suggest how best to mitigate the risk.
- They know what products are available for what you want the products to do. That saves you a lot of research and time.
- They can give you tax advice, because great growth in certain products may mean great tax payments too.
- Their experience means they can point out money mistakes you are about to make.
- They can keep you on top of things because it is their job to study the economy and legislative changes.
A financial adviser worth their weight in salt will help a person at any income level. Their commission is often included in the products you take out; you can negotiate the level; and you can ask what value they will add for you.
Robo-advice is great, but for a lot of people, financial advice still makes sense.