Building wealth requires financial expertise, business acumen and market savvy, which is why working with trained professionals is key for portfolio growth. The value of using an experienced team of financial advisors is clear, by examining the skills they bring to the table.
Financial Expertise
The calculation and use of financial metrics, such as return on investment, internal rate of return and effective rate of return, requires special education and training. It also takes years of experience to learn how to use an education in finance, to become effective at portfolio management and wealth generation. Ultimately, experienced financial advisors combine their real world skills and financial expertise to create viable wealth generation strategies for investors.
Business Acumen
Investing successfully takes an understanding of the financial markets, politics, market risk and a general understanding of the business world. This combined business acumen can only be honed through professional experience, because of the vastness of the financial markets and the business world. Experienced financial advisors can traverse this wilderness in ways few others can, using business acumen to find investments with the right return to match investors' needs.
Risk Mitigation
In general, spotting and gauging risk isn't always that easy for the average investor, which is how financial advisors add value over the long run. There is a lot of risk inherent in the financial markets, and experienced financial advisors know how to identify and mitigate it, to match investors' risk tolerances. Some investors demand higher returns than others, which often-times means taking on more risk, and experienced financial advisors can help those investors too.
Investment Strategies
There are so many different types of investment vehicles in the financial markets -- such as common stock, preferred stock, municipal bonds and mutual funds -- which can make it difficult for investors to select the right type of security to match their portfolio goals. Also, as the market changes, it's difficult to adjust investment strategies to match market conditions. Experienced financial advisors can develop dynamic strategies to keep investors' portfolios growing at the optimal rate of return, given market conditions.
Financial Reporting
Financial reporting packages and metrics help to explain not only investment portfolio composition and historical performance, but they also help planners and investors track wealth generation. Experienced financial advisors are familiar with various financial reporting software, and they can create reporting packages that add value. There is nothing wrong with tracking investments in Excel, but having a defined reporting packaged created by professionals can take the strain of wealth management off of individual investors.
Steady Guidance
It's hard not to sell stocks when the stock market is crashing, but sometimes that's the right move. Experienced financial advisors can offer steady, level-headed guidance when the financial markets are falling to pieces, helping investors preserve wealth over the long run. Having a second opinion on financial moves can avert pitfalls that investors may not see, given the angle at which they're looking at their own money and financial objectives.
Efficient Asset Allocation
Moving money into stocks, bonds and other financial instruments requires time and energy. If investors have a lot of money, it can take a tremendous amount of time and effort to manage, which is where experienced financial advisors can really add value to investors lives and portfolios. Financial advisors can handle complex asset allocation strategies, while investors spend their time engaged in other revenue generating activities. Efficient asset allocation can make real wealth generation a reality.
For additional information on wealth generation and financial advisors, please contact us. We are here to answer your questions, provide guidance and help you meet your financial objectives.