1. Do elder people really need a financial advisor?
Our answer for most people, most of the time is: Manage your own money.
Have you thought about your retirement expenses & income? Where do you go from there? Can you proceed on your own, or do you need help? We are strong believers in do-it-yourself retirement. We think most people have the ability, if they can invest the time to learn the science and art of Financial Planning. But, we recommend not to discount the value of professional advice in all situations….
Given all the variables in the retirement equation and your personal situation, you might be inclined to seek expert advice. And, if you are not good with numbers or financial discipline, or have a very complex financial situation, an expert might be advisable.
2. Is there any benefit for economically well-off people to seek professional financial advice?
Wealthy individuals also have a unique set of financial issues. From coordinating large balances spread across different types of assets, to advanced estate and tax planning strategies, there’s a unique skill set involved in efficiently managing an especially large amount of money. It can often be well worth it for you to seek a Fiduciary advisor.
3. If I have an adequate income stream do I need to consult an advisor?
If you’re a high earner, you may have the ability to save a lot of money but not know the right way to prioritize things, manage risk and the way forward to planning the future.
A good financial planner can not only help you make those decisions and plan future strategies, but may also be able to take over some of the implementation and management responsibilities so that you can focus your time and energy on your business or profession as well as enjoying your life.
4. Multiplying my wealth is really not my focus; do I need professional financial advice?
Just as a doctor’s role is not to make you run a marathon (unless you wish to), a financial advisor’s role is not always to multiply your wealth. An advisor’s role is to provide advice on organizing your finances & taking financial decisions that will help you accomplish, whatever is important to you.
5. Are Mutual Funds risky?
When we invest our savings, we like to allocate it to a few different kinds of investments. We do this to reduce the risk of all our investments going down at the same time. We can truly achieve this diversification by investing in different “asset classes” such as shares of Large cap Companies versus Small cap Companies, Shares of Public listed Companies versus Government Securities, Bank Deposits versus Real Estate and so on.
Very often we can accomplish diversification more effectively and with ease through Mutual Fund investments. It is very very important for investors to know that Mutual Funds are “vehicles” of investments, not an investment or asset class by themselves. We can invest in various asset classes through Mutual Funds, but the Mutual Funds themselves are just a means to do that.
If we invest in a low risk asset class through a Mutual Fund (e.g. a short term debt fund), our investment will not carry much risk. Similarly, if we invest in a high risk asset class (e.g. a sector equity fund) our investment will be carry a high risk. Our risk is defined not by whether we invest in Mutual Funds or not, but by the asset class we invest in, whether through a Mutual Fund or directly.
6. Returns (on Investment) are not the most important precursor for financial well-being.
While the media hypes Return on Investments as the single most important statistic, our experience has taught us otherwise. We have helped clients buy their first homes all the way to planning very large legacies for their families. None of this happened because we stayed focused on Investment Returns.
It happened because we managed the client’s financial risk well. It happened because the client had very good saving and spending habits. It happened because the clients did not waste their time counting money. Instead we did all that we could so that the client could stay focused on what was important to her or him, their work, their family and their life goals. Did you notice, the list did not include return on investments?
7. Not everybody needs a full service Financial Advisor.
There are many people, who by disposition, like to be hands on. Such people would benefit to seek advice on a consultation basis rather than handing over their finances to a wealth management firm. This way they could like to go to a trusted professional to seek guidance and advice, and then do it accordingly but with their own hands, in their own time. They would find satisfaction, feel more in control and be happier that way.
Then there are people who are very busy or are more creative or relationship oriented. They are not happy crunching numbers. If they can afford it, it would make their lives far more meaningful to have a trusted Advisor take over the entire responsibility of their financial matters.
And there are also people who would feel very cramped, should they have to listen to someone else on how to manage their finances. If they have the discipline and the acumen to learn, they would rather pick up the ropes of the financial planning and take care of their own finances, than go to any financial advisor.
It’s important to understand your needs, abilities and inclinations to decide whether you really need a financial advisor.
8. Distinction between Advisors and Relationship Managers is very important.
Financial Advisory is a relatively new profession in our country. For very long we have been seeking financial advice from our bank representatives and trusted Mutual Fund and Insurance agents. Since they represent institutions and product vendors, it’s a part of their job description to visit investors and solicit investments.
Advisors on the other hand represent only you and your interest. Their expertise is not restricted to investments but the entire gamut of personal finance issues and hence their advice is also more holistic. Like other professionals, it is best to visit them at their office.
