In an increasingly complex and uncertain economic context, The figure of the financial advisor stands as a crucial element to achieve the patrimonial objectives of individuals and companies. Through a direct, personal and frequent relationship with the client, this professional analyzes present and future personal and professional circumstances, and recommends strategic actions for optimal asset management.
In our country, the figure of the financial advisor is barely relevant among savers. Norz Patrimonia gives us some keys to understand the figure of the financial advisor, still very unknown to the vast majorityand essential to achieve the objectives.
“It’s a professional in the financial sector who, based on a direct, personal and frequent relationship with the client, analyzes their personal and professional circumstances, both present and future and, taking into account firstly its medium and long-term needs, and, secondly, considering the uncertainties present in the system, recommends executing a series of actions so that the client can achieve their wealth objectives”explains Rafael Rabat, partner at Norz Patrimonia, an economist with more than 25 years of experience in financial markets having assumed different banking management positions.“These recommendations are dynamic over time and adapt to both the new uncertainties that appear in the system, as well as the changes in the client’s asset needs.”says Rabat.
In our daily lives, we turn to professionals such as doctors, dentists, psychologists, mechanics and lawyers to solve specific problems. However, When it comes to our finances, there is often doubt about the need for a financial advisordespite the fact that wealth management is essential for personal and family stability and economic growth. So, why have a financial advisor? “I would clarify the question that many people usually ask.: Why do I want a financial advisor if my bank already does that for me for free?”explains the Norz Patrimonia partner.
A common perception is that banks offer this service for free. However, it is important to understand that, In the financial sector, there are three main types of companies: Credit Institutions (banks, savings banks and credit unions), Collective Investment Institutions (investment funds and companies), and Investment Services Companies (stock companies and agencies, and financial advisory companies). Only The latter’s main objective is to provide financial advisory services, with clear and transparent remuneration for their services..
“All of the above may have financial advisors on the payroll, but Only Financial Advisory Companies have the sole objective of their main activity to provide the service of financial advice. Therefore, only these are dedicated exclusively to financial advice, their remuneration for this concept being clear and transparent,” confirms Rabat.
The importance of financial culture
Spain has historically been a country with low financial culture. Basic economic concepts such as inflation, interest rates and investment diversification are essential for managing savings, investment and debt. For Rabat “It is this low Spanish financial culture that has fact that the management of our finances has historically been delegated to credit institutions, and hence we speak of our bank or savings bank, and not of our financial advisor as is the case in other countries”.
Is the service of a credit institution free? Without a doubt the answer is no. The main activity of a credit institution is to take money from some and lend it to others, and from there obtain a margin. How does a credit institution make money with a service that is not its main activity and for which it must hire resources? Basically masking commissions and price differentials within the products it sells to its clients. The client sees a final performance from which a previous cost has already been deducted. That is why the client believes that the service is free, but it is not. It never has been, and it indicates that it never will be.
“It seems that everything we put the possessive pronoun ‘our’ in front of a profession is because that professional solves a problem for us.. And financial advisors are professionals with highly specialized training in finance who understand what savings is and what it costs to save, who understand what investment is and know what to invest in, and who understand what debt is and even where and why to get into debt”, comments Rafael Rabat. “In addition to understanding the above, financial advisors try to know their client very well financially in order to help them and, very often, know them financially better than the client knows themselves. The financial advisor then becomes a kind of financial psychologist who understands the client’s financial behavior and adapts it to the circumstances of their environment and the financial objectives they have.”continues the Norz Patrimonia partner.