Owing to the increasing hype and importance of financial planning, hiring a professional financial advisor has become a common trend. Moreover, the upsurge in the demand for financial planners has resulted from rampant online promotion of the same. You also must have come across various promotional posts which encourage users to hire comprehensive financial planner in India.
Now, before you stop by and get enticed by such a post, ask yourself-
Do you actually need a comprehensive financial planner in India?
However, the majority of the people don’t seem to comprehend that a financial planner is not always required. As a matter of fact, you can do comprehensive financial planning even without seeking the assistance of a professional.
To make it easier for you to understand, let’s discuss 7 scenarios in which you don’t need a financial planner.
7 Scenarios In Which You Don’t Need A Comprehensive Financial Planner
Here are the 7 scenarios in which you don’t need a financial planner.
Tax Savings and Filings
If you’re looking for someone to help you file returns and reduce tax liability, you needn’t hire a financial planner. Although comprehensive financial planners can help save tax but only up to a specific extent. Additionally, the planner is definitely not going to file your returns at all. A financial planner will focus on the bigger picture and recommend certain investments to help you save tax. Hence, if saving tax is your only target, it’s better to hire a Chartered Accountant rather than a financial planner.
Financial Mess And You Want To Come Out Of It Immediately
A comprehensive financial planner doesn’t have any magic wand which can help you get rid of the financial mess immediately. If you’ve to pay loans but don’t have much surplus in your possession, a financial planner cannot offer immediate assistance. They can definitely help you escape the financial mess though it will take time. If you’re able to understand the same, you can definitely hire a financial planner but otherwise you don’t need one. The same thing applies to your financial goals. If you don’t have sufficient surplus to invest and cannot alter your goals, financial planner wouldn’t be of any help.
Unmarried, Employed with higher education goal only
Let’s assume that you’ve just started working and your only goal is to undergo higher education within 2-3 years. In such a case, a financial planner would not offer any significant help. It will only ask you to invest your monthly surplus in either recurring deposit (RD) or fixed deposit (FD). Other than this, a comprehensive financial planner can only help you with term insurance and that too if you’ve dependents. So if you’re unmarried, employed and have goals to pursue higher education, you don’t need a financial planner. You should invest in either RD or FD and take a good health insurance plan simultaneously.
Running behind returns and Daily Tracking
If you think that a financial planner can help you gain extraordinary returns, you need to give it another thought. A comprehensive financial planner`s job is to help you achieve your goals. And for that, he can even ask you to invest up to 50% corpus in debt instruments. If your financial goal is just 4-5 years away, he may ask you to invest your entire surplus in debt instruments. Therefore, if your only motto is to get those extra returns, you do not need to hire a financial planner. Even for long term goals, the financial planner will make the selection only from those products which are available in the market. Since you also have access to the same products, a financial planner would not be of any use at all.
Moreover, if you want your financial planner to track your returns on daily basis and suggest the correction accordingly, do not hire one.
If you are only looking for stock specific recommendations, you should not hire a comprehensive financial planner at any cost. Speaking of the financial planners I have come across, most of them do not recommend stock investments. Nevertheless, they suggest their clients to opt for equity mutual funds as it’s a comparatively safer than investing in stocks.
Retired with monthly pension and less surplus
When you’ve a regular pension with additional 30-40 Lakhs in savings account/FD, you don’t need a financial planner. The reason being, you aren’t dependant on any portfolio for regular income to meet your monthly expenses. But, if you’re not covered under any Mediclaim policy, the best thing would be to take a health insurance cover. Do not invest as per suggestions of your relationship manager or agents at any cost. Furthermore, just keep that hard-earned money only in savings account and FD.
If you are a DIY investor and have your basics in places:
- You have bought a term insurance.
- Health insurance has been purchased.
- You have also purchased a personal accidental policy.
- You have allocated your assets properly.
- Your investments are in auto pilot mode.
If you have done all the things listed above, you do not need a comprehensive financial planner in India.
It cannot be denied that comprehensive financial planning is extremely essential. However, it is also important to note that not everyone needs a financial planner. The concept is new for India and it is gaining popularity. So, if you are not able to manage your finances in the right way, consider hiring a fee-only financial planner. Lastly, feel free to come in contact with us and we’d be more than glad to help you out.