In recent times, the Nigerian economy and market has become very volatile and unpredictable. So making financial decisions has become very difficult especially owing to the fact that no one can predict the future of the Nigerian market currently. Financial advisors will definitely have roles to play in trying to salvage the financial situation that investors and traders have found themselves into recently.
Introduction
Advisers are people with formal and professional knowledge about particular areas of concern and are hired by organizations and persons who needs them to give professional opinions, suggestions and profiling of solutions whenever there’s need for such.
Financial Advisers are also people with professional knowledge and economic expertise. They offer professional advise on economic challenges.
For example, if you’re a businessman or an investor, since you have no prior experience of the investment you want to venture into, it will only be wise if you hire the services of a financial advisor who would advise you on the right investments to make which have the potential to yield smore dividend.
Financial advisors may also offer professional advise on how money should be expended. What is needed and what should be forgone. He is responsible for differentiating between needs and wants.
Before we fully dive into explaining what the roles of a financial advisor is, it is very important to first understand who a financial advisor is especially in the context we are referring to it.
Irrespective of the many explanations and the definitions that other people or writers may have given about a financial advisor, we must try to elaborate on it in our own context as we may be using later on in this article.
Who is a financial advisor?
A financial advisor is one who acquire a formal financial training to offer financial advise and help people in making professional financial decisions.
With the help of a financial advisor, you can be able to make financial decisions that can totally prevent your business from totally collapsing.
This is very important especially having witnessed the worst recession five years ago, we should be planning to over such when it does happen. The World Bank reported in the mid 2020 that the Nigerian economy was facing a worst form of recession in more than three decades. Though Nigeria is no longer in recession both the government and business owners, investors and rich people should plan ahead to avoid a reoccurrence.
Nigeria is no longer in recession but market volatility continues, so it’s not our of place to hire financial advisors especially now that the entire market is very volatile, seeking the advice of a financial advisor is very important and should be a paramount decision for any investor that wants to override certain factors that may be causing unstable prices of goods and services.
Why a financial advisor is needed by the Nigerian investors
A financial advisor is needed by the Nigerian Investors due to the following reasons;
1. Management of Risk: Due to the volatility of the present market in Nigeria a financial advisor is needed to help make professional decisions that may help in mitigating the risks that often comes with certain investment choices or portfolios.
They offer professional advices on whether such an investment choice needs to be insured against unforseen circumstances or not, as well as the best strategies to use while trying to maximize profits and incomes.
2. Review and Accountability: There are some people or investors who do not really care or take account of the expenses they are incurring. Such people needs to urgently hire a financial advisor who would on a regular basis review and more importantly adjust some of spending plans as he may deemed fit.
The financial advisor may also keep monitoring the progress of the investment or business to make sure that chances of losing are minimized.
For instance, a man who invested in real estate properties and wants to sell a unit of the properties to buy a car when the price of the property is yet to go up but there are indications that it may go up in the near future, the financial advisor may ask the man or his client in this case to rather take a loan, though depending on how important buying the car is other wise he may ask his client to rather wait and give more time to the investment and allow it reach a maturity stage. By maturity stage I mean a time when it’s price will be at its positive pick or highest.
3. Knowledge and expertise (know-how): Just as i have similarly stated before, a financial advisor has the “know -how” or knowledge and formal training to give professional advice to his client. Of course, he acquired his expertise or knowledge from school, and that is to say they have spent many years learning what they know. So the major reason for hiring a financial advisor is their knowledge, you definitely would not hire someone who has not had any education or formal training about finance to offer investment or financial management advice.
Even the government needs them or their advices to make financial or economic decisions.
4. Planning for Retirement: Those who are in the civil service in both government and private sector, must retire some day, and many who failed to plan for their retirement will retire and have nothing to support them especially at old age. Hiring an expert in financial management will help them to plan for many years before they are due for retirement.
Financial Advisors will help them to make decisions that usually includes investment strategies, savings and pension contributions.
5. Investment Opportunities: Almost all who worked and are about to retire would also want to become bosses of their own businesses when they retire from their monthly pay jobs.
This is also achievable when they hire a professional that will offer them such investment ideas that may help you during the days of work, so that by the time you retire all the money saved may be more than enough to start up a particular business that will make them bosses of their own.
For instance, a man who works for a N200,000 pay in Nigeria and has ten more years to work before retirement, and if he or she are planning to establish a high school after retirement, he may actually begin by saving to buy land where the school would be sited.
This should take him a year if he or she is saving N100,000 monthly. By the time he finally retires, he or she might have bought a land, built classrooms and furnish them within the ten years.
6. Financial advisors can sometimes act as behavioral coaches: What actually do I mean by behavioral coaches?
Well, as a professional, he may help client to make financial decisions that can help them refrain from any behavior that is capable of harming their financial progress, such as extravagant spending.
For instance, a man who smokes and drinks alcohol on a regular basis maybe losing money as they spend so much on buying alcohol for themselves and their friends. Such a person needs a behavioral coach that may help him or her adjust certain behaviors that are financially harmful.
7. Planning for real estate purchase or development: Your family needs shelter and as the bread winner for the family, it is not out of place if you start making plans for that while you are still working for a monthly job.
Financial experts may help you to figure out the best savings strategies that can help you save towards owning a real estate property.
Conclusion
The role of a financial expert can not be over emphasize, as they are broadly needed in making any form of financial decisions. Evidence or proven results shows significant progress when financial experts are involved in any financial decision made especially those that has to do with choosing investment portfolios. From planning to retirement, hiring the services of a financial expert can never be a waste of resources
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