Advisers assist in mapping out fiscal responsibility

When most people get the seasonal cold, they load up on tea, head to the drugstore to self-medicate. But for something more serious, they make a doctor's appointment. Financial advisers say people should treat their personal finances in the same way, but the tricky part is knowing when to go and what to do.

"Ideally, individuals should set aside time, on a regular basis, to assess and review their financial arrangements," said Christopher Lean, consultant to Square Mile Financial Services. "This could be to ensure they are getting the best deals for their gas, electricity, credit cards, mortgages, phone tariffs, etc. However, there will be a point at which most individuals will need to take advice from an adviser."

At some point or another, everyone takes a more aggressive approach when planning their finances. And with the financial crisis affecting everyone across the world in some form, people are becoming more discerning with both their short-term and long-term investment strategies. The question is when to seek out an adviser and when to go it alone.

According to Lean, whether a person is looking for assistance or not, they need to get an up-to-date summary of all their bank accounts, investments, life insurance policies, loans, credit card and mortgages. Then it's possible to look at both incoming and outgoing money to start making a plan.

"The role of the financial adviser will be to establish the financial sophistication of the individual and, based on his or her circumstances, create a financial plan that makes it clear who is responsible for dealing with what," Lean said.

While personal finances, bank accounts, savings accounts and some small, safe investments are something analysts say people can and should feel comfortable about handling on their own, most will still need to perform their own research and make sure it's up to date, and not rely on speculation or past performance.

"Warren Buffett once said, 'The investor of today does not profit from yesterday's growth,' and I think that is a common mistake people make when investing their money on their own," he said. "There needs to be an understanding of the difference between investment and speculation as well, because investment should focus on the protection of the principal sum invested and satisfactory return. Anything else is speculation."

In addition, if individuals go it alone, financial experts say everyone should have a contingency reserve in case the market is not performing up to expectations. This will protect people from having to cash in investments when they are at the bottom of the market as well as reduce any penalties from cashing in early.

Just as many are wary to make any risky investments, many are also apprehensive about shelling out money for assistance in financial planning.

"Financial planners are not necessarily financial advisers or financial salesmen," Lean said. "The role of a financial planner is simply to help people put together a plan to ensure that the income of the individual or family is protected throughout life and to cover all contingencies. It doesn't have to require a large fee."

Megan Battista can be reached at
features@praguepost.com