Do I need a financial planner?

It’s the most fundamental question isn’t it? Yes, I do earn a decent some of money and do invest it already for my future needs, so is there a requirement for a financial planer per se?

To answer this question, we first need to evaluate what a financial planner is and what he does.

Market regulator SEBI in it’s circular dated 21st Jaunary 2013, has made it very clear that a financial adviser/planner has to be distinguished in his role and function from a financial broker.

So an adviser is someone who will help design your financial plan and the broker will help in it’s execution. The 2 roles are very distinct and I would like all my readers to be very clear about who you have dealt or are dealing with.

While both functions are important, one may still find it easier to replace the broker role, especially with the recent advances in technology.

A financial planner however has a very important role to play.

Sure, you may be able to manage something on your own but it would be far from the ideal scenario.

Trying to do your own financial planning without adequate knowledge is as bad as trying to treat your own illness without consulting a doctor or god forbid fighting your own legal case.

The role of your planner is to understand your requirement, your finances, your goals, your family background, your expectations and come up with a tailor made plan only for you.

And the plan must comprise of several different elements one of which is investment planning, but other critical ones such as risk management, estate and retirement planning, tax planning etc cannot be ignored either.

The benefits of working with a good financial planner will be as follows-

1. In depth knowledge of how economies and markets function and being able to have some foresight regarding the same.

2. Complete understanding of various financial products in order to be able to determine what might work well for a client.

3. Clear advisory fees structure, hence no clash of interest in recommending a product and keeping the client’s best interest in mind.

4. Constant monitoring, review and feedback to ensure client’s chosen path is not deviated from.

Now comes the question as to what criteria to look for in an adviser and I would highly recommend a healthy combination of the following-

1. Knowledge of various financial instruments which can be tested through the certifications he/she has accumulated.

2. Adequate experience in the financial markets.

3. A clear and transparent fees structure.

4. Clearly defined working policies and agreements.

The SEBI website does carry the list of fee only financial advisers across major towns in India and one can go through the list to locate one, however the best approach I feel is to go with someone who is known in your circles or whose services have been availed by your acquaintances and judge whether they will be able to fulfill your requirement after meeting with them.