Do You Need a Financial Advisor?

When we plan our finances or try to create an investment portfolio, we ask this question from ourselves. Do I need a financial advisor or I can do it on my own?

Somewhere in our mind we will always have this confusion whether or not we should trust someone else for our money.

I will give answer your query with a very simple example.

One of my friends recently planned to do a fixed deposit for around sixty thousand rupees. When he visited the bank, the bank executives explained him about a different plan which can give him better returns. They were very convincing and we trust bank more than anyone else when it comes to financial decisions. Even when he got the plan documents, he was unable to identify what plan he bought as papers were not easy to understand. Finally, when he consulted us, the plan turned out to be a ULIP. A unit linked insurance plan. Because he contacted us after 2 months of receiving the documents, there was no option to return the plan. Now he has to pay sixty thousand as premium every year for at least 10 years to get good returns from ULIP.

This is a true example and let’s see what issues he will be facing due to this.

•     Fixed deposit was his onetime plan but now he has to pay it every year.
•        He already has good insurance cover with term plan so insurance was not his need.
•        He cannot withdraw the money in between even if he need it as it will be a loss.
•        He is only 27 in his age and there are better investment options available but he can’t take          benefits.

What should have been done?

He should have consulted a financial advisor before even going for fixed deposit.

It sounds strange because FD is the safest and easiest option we think for saving money. But we need to change the way we think about savings and investment.

Why it is important to consult?

There are many financial instruments available in market. All are good but may not be suitable for everybody. The product requirement may vary according to your age, income, marital status, number of dependents, short term or long term goals.

Consulting a financial advisor is like consulting a doctor for financial health. You know what medicine you need to take for fever but still you need to consult doctor as fever may not be normal and may cause some serious issues.

How to choose a financial advisor?

• You can talk to different advisors and then decide.
•  Advisor should not be forcing you to go for one type of product only he should have an umbrella to offer.
•  He should be guiding you according to your financial goals and not according to your financial status.
•   Do not only trust on big brands but choose experience.
•   Ask questions to understand the reason why he advised you something.

I understand it is not easy to trust someone when it comes to your money matter, but you should trust the expert advice. You can be good with what you do daily and they are good at what they do daily.

Disclaimer: The views expressed in the blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.

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