Like doctors and lawyers, financial professionals can provide invaluable expert guidance to help us through transformative life events.
Yet, unlike the jobs of medical or legal professionals, many of us lack common knowledge of financial professions and thus do not know how to use online financial planner help to our benefit.
Today, with the rise of emerging wealth technology, this information gap is even greater, with many people still learning how online financial planners use technology-first approaches to manage wealth.
The financial planning learning curve is still developing especially in the UAE.
Only 25% of UAE residents save every month and almost half struggle with debt repayments, according to the Abu Dhabi Islamic Bank.
Admittedly, this problem involves a catch 22. Though you may realize you need financial help, ways to solve your personal financial dilemmas may not be as evident as medical or legal needs.
However, that doesn’t mean that poor financial planning is any less damaging than poor diet habits or bad legal counsel.
Sometimes it is hard to admit that we need professional help. By seeking out the help of an online financial planner, we must acknowledge that — like doctors and lawyers — financial planners and the new digital tools they use can play a lasting role in the health, happiness and direction of our lives as much as these other stalwart institutions of society.
Here, we’ll help you discover just how seeking professional online financial guidance can help transform your outlook and empower you to take control of big life events with technology-first approaches.
So, how can an online financial planner help me?
An online financial planner can serve you with a broad range of guidance. Some of the most common reasons that people seek out the help of online financial planners is for:
- Getting out of debt
- Retirement planning
- Starting an emergency fund
- Building an investment portfolio from scratch
- Diversifying your savings account
Here, Sarwa will take a look at the work of an online financial planner to explain how they can help you. This guide will answer the following questions:
- Who is an online financial planner?
- What do online financial planners do?
- What factors should I consider before choosing an online financial planner?
[Looking for an online financial planner? As the UAE’s top
1. Who is an online financial planner?
Online financial planners or advisors are people who have experience and expertise in helping their clients achieve certain financial goals.
They seek to understand your current personal financial circumstances and future goals, and then design financial strategies to help you achieve them.
Today, these professionals are assisted by adding a layer of digital financial planning tools, which help to minimize risk and automate important financial processes and bookkeeping, such as the ‘Know Your Client’ step, portfolio recommendation, portfolio rebalancing and dividend reinvestment.
Put another way, online financial planners leverage new technology to better take you from where you are now (financially) to where you want to be. This allows them to cut costs which ultimately reflects on your returns, and reduce time needed to onboard clients. Time is an important commodity in investing: the sooner you start, the more time your money has to work for you.
This approach in the profession creates a technology-driven financial dimension around big life decisions in order to help put up a roadmap and achieve personal goals, whether that is early retirement, a new business, a new house, or a dream vacation.
2. What do online financial planners do?
These professionals specialize in offering guidance to take us from the path of financial mismanagement or unawareness to a strategic financial roadmap established purposely to reach our goals.
To help us determine these goals, online financial planners ‘interview’ their clients to understand their unique financial profile by asking a set of online questions.
Using this information, which can include your current age, ideal retirement age, current savings, current income and other important personal factors, they then outline a timeline to achieve your desired goals.
Afterwards, following an allotted timeline, the online financial planner will be able to suggest an investment portfolio, risk level, monthly contributions and the overarching strategy needed to move you down the roadmap and closer to actionable end results.
Below are some common services that financial planners and advisors provide:
- Debt management
Debt is one of the greatest hindrances to achieving financial goals.
Online financial planners can come up with strategies to help you pay off debts. For example, such an approach can include setting up emergency funds as a way to prevent future debt.
Setting up a budget (and sticking to it) is an essential step towards financial success. Here, online financial planners can give you recommendations on a customized budget that aligns with your financial goals.
With the help of this recommendation, budgeting will help you jumpstart your savings and investments. Furthermore, using a budgeting app like Mint can also help you take control of your expenses and savings.
Everyone needs to plan for retirement.
An online financial planner or advisor will help you create a viable plan to understand how much you need to save for retirement, invest your savings in accounts tailored to your risk level, minimize taxation, and advise how to withdraw your money while keeping you on track to achieve your financial goals.
- Investment / wealth management
An essential part of online financial planning is growing your wealth. Due to natural inflation, the best way our money can grow over time is if it is invested.
An online financial advisor will help you design an investment portfolio that matches your time horizon, risk tolerance, and financial goals.
Today, the rise of robo advisors is transforming investment and wealth management. In short, a robo advisor is an online financial advisor that helps you create and execute an investment strategy that matches your specific financial profile.
Moreover, robo advisors combine technology and professional investment advice to provide maximum value and benefits to investors. These platforms minimize risk and automate investments using best practices like portfolio rebalancing.
They also afford you the convenience of monitoring your investments in
3. What factors should I consider before choosing an online financial planner?
When you need to conduct an elective surgery, what do you do? You don’t go out and enter the first clinic on the street. Lots of research should be done to find the best clinics and surgeons.
Similarly, you need to put in some effort when choosing an online financial planner.
The lack of time put into understanding online financial planning is what can create lasting harm if done incorrectly.
Here are two crucial factors to consider:
Growing your money through investments is a core part of financial planning, so finding an advisor that matches your personal philosophy is important.
Here, understanding the difference between active and passive investing is crucial.
Active investors try to beat the market by picking individual stocks or purchasing actively managed mutual funds.
On the other hand, passive investors seek to track the performance of the market via an index like the S&P 500.
When considering the difference, we suggest its best to take into mind one of the most famous Warren Buffett quotes: “The stock market is designed to transfer money from the active to the patient.”
For nine consecutive years, actively managed funds have trailed the S&P 500.
For these reasons, it is better if you embrace an online financial planner with a passive investment strategy over active investing.
Trust is the currency of the financial services industry. If you cannot trust someone with money, then you better pass.
Currently, this is a big issue in the UAE.
Only 32% of UAE residents who work with financial planners believe they are trustworthy. Such figures show the need for more careful evaluations of financial planners before getting on board.
Below are three main points you would want to look out for when choosing your financial planner and advisor:
- The company you choose is regulated. That means that it is subject to strict laws, stringent financial reporting requirements, regular audits by authorities, and specific client-handling regulations. You need to know that a proper course of action can be taken to protect you when needed.
- Your assets are in a segregated account. With any brokerage you use, your money and the firm’s operational account (i.e., what the firm uses to pay its bills and to operate on a daily basis) should never be mixed. You also should have visibility over the movement of your assets at any time.
- If something seems too good to be true, it typically is. If the investment strategy is too complicated, and the returns promised seem ‘very tempting’, look deeper and make sure it does not come with that extra risk. This usually is a red flag.
- Read online ratings, reviews, and check out comments on social media. This helps you to judge the service by comparing the insights of other clients that have already tried it.
The bottom line — never work with a financial planner you don’t trust.
The smart way to invest
Today, emerging financial technology has made the arena of financial planning much more accessible, effective and convenient.
Sarwa is a robo advisor and online financial planner that can help guide you to create, execute, and manage investment plans to reach life-changing financial goals.
Our team of technology-first financial experts seek to understand your time horizon, risk tolerance, and investment goals, and then use emerging financial technology to customize an investment strategy to best grow your wealth over time.
With our robo advisory platform, our financial experts are then able to automatically rebalance your portfolio and reinvest your dividends according to your unique profile.
Importantly, our philosophy aligns with the global best practices for long-term investing. Sarwa embraces hassle-free passive investing and helps you create a diversified portfolio of investments that have shown a strong historical performance.
In addition to these services and offerings, Sarwa charges competitively low fees — 0.85% of your average monthly balance. This advisory fee moves down to as low as 0.5% for larger accounts, making our online financial advisory platform a modern, low-cost solution for wealth building.