Why Nobody Cares For A Financial Planner

Financial planning is not terribly difficult, but it requires time and effort. It also needs some amount of expertise and knowledge.

A qualified and competent financial planner will be able to devise and execute a suitable financial plan for you. But most people do not prefer to enlist the services of one. Many prefer managing finances on their own for multiple reasons.

A comprehensive financial planning process includes the following steps –

• Determine the current financial situation.
• Determine financial goals.
• Create a financial plan based on income, expenses, savings, and goals.
• Review the financial plan regularly.

Let us consider why people do not care for a financial planner and evaluate the reasons –

Must Read –7 Compelling Reasons To Hire A Financial Planner In India

1) Hiring a Financial Planner is an expense

Financial planners are professionals who charge fees for their services just like doctors or interior designers or lawyers. They charge fees in different ways –

• Fee-based planners charge a certain fee irrespective of the money invested or returns generated.
• Other planners charge based on the total assets under management. This links their growth with the client’s growth.
• Some planners earlier used hybrid models.
• Some planners charge for every transaction made or based on returns generated. (normally PMS guys)

People feel it is an added expense that can be avoided. Some feel that planners who charge fixed fees get paid regardless of performance. So there is not much incentive for them to work hard and smart. Others feel that planners who get paid for transactions might increase the number of transactions unnecessarily.

But it has to be understood that they use their knowledge and financial management skills to plan your finances. If you are unhappy with their guidance, you can always stop availing of their services. Are you cost-conscious and also willing to spend time on managing your finances? You can do it yourself after a couple of years of handholding. (but even after almost 2 decades in this investment world – I have a Financial Planner)

Read – How much should an Indian Financial Planner Charge

2) I can plan my finances by myself

Sriram, who is a 32-year old corporate sales manager, wants to plan all his investments and finances himself. He feels he can do it himself by reading books and watching business channels and getting information from financial websites. Some people feel they just need to invest money in index funds and let them grow. But putting money in index funds is just one aspect. Insurance, risk management, retirement, and other aspects have to be managed including behavior management.

It is good to learn financial planning and also be able to handle your finances independently. But do you have enough time and energy? He works long hours and travels at least 10-12 days a month for work. So he does not get enough time to optimally plan his finances. This leads to haphazard money management or investments based on friends’ recommendations. It might be better to hire the services of a professional who can manage your finances keeping your particular circumstances and goals in mind.

Blog Post – 10 Questions if you are on the Path of Do-It-Yourself Investing

3) Financial planners will not have my best interests in their approach

Banking relationship managers & insurance agents push certain products that might not be in your best interests. You are doing the right thing by avoiding such people. But now you have better options including SEBI Registered investment Adviser or Certified Financial Planners – who are fiduciary & keep clients interest first. Always remember – trust but verify.

Also, Read – Importance of Financial Planning in Your Life.

4) I do not have much wealth and so do not need a financial planner

I have heard many people say, “I am not Ambani to need a financial planner. It is a misconception that only the rich need financial planners. Rich or poor, you require money to take care of your needs and wants, give your family as comfortable a life as possible and achieve your life goals. It is advantageous to have an expert to guide you on the right path to create wealth.

   Check –9 Little Ways to Save Money in India

5) I do not want a third party managing my money

People are wary of disclosing their financial information to strangers. It is quite understandable. But an able financial planner understands you and your financial aspirations before creating a plan or giving you advice. He will make you feel comfortable sharing information with him. If you are not comfortable working with him, you can look for alternatives. If they feel you need a different kind of planner, they would suggest the same.

Also Read: 7 Compelling Reasons to Hire a Financial planner

You can select a financial planner based on references or set up initial meetings to understand their expertise and rapport with them.

There are some cases wherein you can work on your own –

• You have recently started earning and have no dependents. You can manage basic financial planning. You might not require a financial planner as of now. But in the future, your income increases or you have financial dependents, you might need an expert to take care of your finances.
• You are retired, and most of your life goals have been achieved, you might not need the services of a full-time financial planner but at least have regular financial checkups if you understand the importance of health checkups. 
• You are an expert in financial matters and can manage your investments without bias and emotions. In this case, you may be able to manage your financial plan. But you would need to invest a significant amount of time and effort into it. Moreover, you will have to update your knowledge regularly in aspects of taxation, investments, optimum money management, etc.

In most other cases, it will be beneficial to avail of the services of an expert to manage your investments, monitor financial risks, and work towards increasing your income and wealth.