Why should I hire a financial planner?

Financial Planner

India has definitely come a long way when it comes to literacy. We have achieved 73% literacy rate in recent years, up from 17% at the time of independence. While we should cherish and celebrate that most of us are now educated and India can achieve 100% literacy in few years to come, the other set of data paints a completely different picture. As per recent data, only a few of us are financially educated. If the data compiled by the survey conducted in 2015 to be believed; only 24% of the Indians are financially literate. Financial literacy is as important as getting a basic education. According to its literal definition, financial literacy is the ability to use knowledge and skills to take effective and informed wealth management decisions. For a country like India, this plays a bigger role as it is considered an important appurtenance to the promotion of financial inclusion and ultimately financial stability. Since most of us are not Ph. Ds in the subject, hiring a financial planner becomes extremely important for us.

Financial Planner

Financial illiteracy also puts a burden on the nation in the form of higher cost of financial security and lesser prosperity. An example of this is the fact that most of the people resort to invest more in physical assets and short-term instruments and not in long term investments.

A survey conducted by Aviva Life Insurance Company says that Indians dream big. No doubt!. But when it comes to plan their goals and act accordingly; they fail. As per this survey report, Indians are poor financial planners. The survey had two indices: Dream and plan index. While dream index stood at 61 for a topmost tier, plan index was just 24. In India, investments are majorly done because of tax benefits and not because of product benefits.

So, if you ask yourself “Do I need a financial planner?’, the answer would be yes in 90% of the cases. It is not that the educated ones out there won’t be able to manage their money and plan well, but it is any day better to leave certain tasks in the hands of experts

How to choose a good financial planner?

  1. Be Clear With Your Goals: Before visiting a financial planner, you should be clear with your goals- the very purpose of your financial planning. For most of us it might be just to save taxes, however, for others, financial planning means a bit more. Financial planners can give you the best money-related advice. So you can go to them if you want to save, invest and grow your money. With the help of a financial planner, you can plan for your retirement, child education, child marriage, etc. He will advise you depending upon your need, current assets and liabilities, cash flow and even whether the goal can be achieved in the specified time frame or not.
  2. Find a Financial Planner after checking his Qualifications and other Credentials: After you are clear with your goals, the next step is to find a good financial planner. You can get references or suggestions from your friends and relatives. However, it is advised that you check one’s qualifications and other credentials before appointing him or her as your financial planner.

 You can reach out to those few individuals who have any one of the following qualifications:

  1. Certified Financial Planner: This chap holds a bachelor’s degree, and has significant knowledge of financial planning and advisory. Further, he also has at least three years of related experience.
  2. Chartered Financial Analyst: CFA holds a wide range of expertise in financial analysis, securities, portfolio management, investing and banking.
  3. Chartered Financial Consultant: This qualification is similar to that of CFPs, except that ChFC does not have a comprehensive series of tests and also it does not require to abide by a code of ethics.

Generally, Certified Financial Planner and Chartered Financial Consultant are approached for advisory and financial planning purpose.

One of the best Certified Financial Planners in Delhi is Mr. Mukesh Gupta. He is a Chartered Accountant as well and has over 23 years experience in Wealth Management industry. You can approach him for online investment advisory as well. Visit Wealthcare Securities to know more.

How to work with your Financial Advisor?

  1. How much experience your Financial Advisor holds: You should ask your financial advisor whether he or she has experience in handling clients like you. Further, ask your prospective advisor whether he or she will be accepting payments on the basis of fee or commission.  Nowadays most financial planners make money only when you pay them the fee for your financial planning. They don’t get a cut from fund companies or insurance companies. These advisors receive a flat fee; say a few thousand bucks for a financial plan. Rest charge an annual fee; minute percentage of assets which they are monitoring or charge on an hourly basis.
  2. How is his Interaction with his Clients: If you have shortlisted your financial planner through reference, learn and do a bit of the research – how he or deals with clients? Also learn about the frequency of communication- whether, he meets his or clients only once, or a continuous basis. Make sure your to be financial advisor periodically reviews your plans, ask you your concerns and worries and advise you in all your big decisions throughout a lifetime.

Final Word

A financial planner for you is exactly like a coach to any player. You should be able to trust him or her with your money. Any good advisor will educate his client about related knowledge and will involve him in all financial decisions. Make sure you are quite comfortable in sharing your life goals and money related information with your planner- he will be able to advise you accordingly and construct a bridge between your goals and current situation.

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