A financial advisor is a professional that provides expertise for clients’ decisions around issues of money, personal finances, and investments. Financial advisors may work as an independent agent, or may be employed by a larger financial firm; Julia Kagan, 2019. Financial advisors are mostly consultants who have experience in handling financial dealings. Mostly, good financial advisors are people who have been in the financial market for a number of years and can best tell what is good for any client due to experience.
Since 2017, the Ghanaian financial sector has been undergoing some form of restructuring. The reforms began in august 2017 when the bank of Ghana revoked the licenses of two banks. A year later (1st Aug. 2018), five more banks collapsed.
The central bank moved to the microfinance sector in May 2019, revoking the licenses of 386 companies which it said were insolvent. It announced an end to the clean-up after it closed 23 savings and loans companies and finance houses in august 2019.
The Securities and Exchange Commission (SEC) has revoked the operating licenses of 53 investment companies on Friday 8th September 2019. The revocation of the licenses, according to the regulator, is to protect the integrity of the securities market and investors.
At the time when all these reforms were going on, people were in panic and confidence was lost in the financial sector. Where were the financial advisors?
According to the S&P Global Finlit Survey (2014), only 32% of adults in Ghana are financial literates. If all financial literates in Ghana had financial advisors, then it basically means that 32% of Ghanaians have financial advisors which is never the case. In that, there is a large number of financial literates who don’t patronize financial advisors in taking their financial decisions. This becomes an issue to tackle since all the advises the financial advisors give are not real; presumably, from the past. To a large extent, there are too many crooked or fake financial advisors around. To get the best out of all these, there is the need to find honest financial advisors who will help you to achieve financial independence and meet your investment or financial goals.
Some financial advisors offer financial planning services but not investment management services. Others manage investments but provide little financial planning. Some have expertise in retirement income planning focused on those near or in retirement. While others focus on accumulating wealth for those who are nowhere near retirement. In brief, there are three main types of service advisors.
Financial planning focuses on all aspects of your financial life such as how much to save, and what type of insurance you need, while Investment advisory services are focused on investment management and as well, Retirement income planning is focused on how you coordinate toward the goal of delivering a retirement paycheck for life; Dana Anspach (2019).
To locate the best financial advisor for your situation, you need to know what your financial needs are and what type of service a financial advisor provides.
By Kenneth Adu