Page 27 - Waterfall City Issue 5 May 2023

moments of fear and how to build a also to prompt the right kind of action diversified to help mitigate external
solid, sound financial plan and calmly in the right direction. and internal risks.
see through its execution. Becoming
“financially fit” involves discipline, Another one of the biggest Financial advisors as part of
trust and lots of practice. pitfalls that investors fall prey to is the journey
compartmentalising their financial Sometimes, the most constructive
Translating planning into needs and creating silos within their action an investor can take is to
action portfolios instead of taking a holistic step away from monitoring their
Market volatility is not the only view. For example, investors often investments and look at their portfolio
factor to plan for. One of the see their goals as individual targets holistically. A financial advisor can
biggest mistakes investors make instead of part of one overarching provide this outside perspective and
is not following through on their financial plan. help investors understand how all
financial plans or abandoning the “working parts” of their portfolio
them when circumstances change. In doing so, they may treat operate together towards realising
Unexpected life changes, sabbaticals, these investment goals as single their goals.
retrenchments, career overhauls and investments, siloed against the rest
divorce are just a few of life’s many of their portfolio. This, in turn, may Both investors and advisors should
potential curve balls. lead to investors comparing one have a clear understanding of what
portfolio against another; like for the role of the advisor entails. While
Financial plans must be robust but like, without taking into account the advisors play a key role in helping
highly adaptable, with enough complementary roles that assets play clients construct a financial plan
guardrails to account for the within a well-diversified portfolio, or according to their dreams and
unexpected. And once a financial plan the different long-term goals of the aspirations for the future, financial
has been established, preparation investors. advisors are also coaches and mentors.
needs to be followed by action. Here, Investors can (and should) lean on
the financial advisor will play a key This could lead to investors switching their advisors for support, guidance
role in ensuring that an investor’s too often or prematurely (driven by and intervention throughout their
plan is in line with their changing fear or greed), so they end up with financial journey to ensure successful
circumstances and lifestyle needs, but a portfolio that is not strategically investment outcomes.

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