Why You Should Seriously Think About Fee-Based Financial Planning

PersonalFN
Aug 9, 2017 · 5 min read

Harry, an artist by profession, followed his best friend Tom’s advice in financial planning and consulted him for every financial decision. Tom was a financial advisor who had very little practical knowledge. He provided a free service and had a commission-based revenue model. Harry’s portfolio progressed well for a year, and he was happy with the growth. But, as soon as the markets started to decline, he incurred heavy losses.

Suhas, on the other hand, invested his entire investible surplus by himself. He did some research all by himself, to zero down on stocks and mutual funds, and purchased them when their prices/NAV fell. He perceived this to be value buying, but little did he care for the macroeconomic indicators and fundamentals of the securities. Such an out of kilter approach has resulted in a loss for his investment approach.

What is the one thing that Harry and Suhas both need the most at this point of time?

A professional unbiased certified financial guardian!

You pay for nearly all the services you are rendered, then why should you hesitate to pay for your own financial plan in the interest of your long-term financial wellbeing?

But you need financial planner, or in fact a financial guardian who is a mark of trust and respect, and he/she exemplified high fiduciary standards at all times — handles your hard-earned money with enough care and prudence, much as how even would managing his own personal finances with an unbiased and an independent approach, where the recommendations are backed by rationale and scientific study. A fee, however, is the monetary price you would have to defray to avail such a service.

Many unfortunately, don’t reach out to financial guardian. Like Harry and Suhas, they either rely on agents/distributors who keep their interest (or earning greater commissions) at fore than of their clients, or simply rely on their own shoddy research to invest, or even follow tips from friends or relatives, jeopardising their long-term financial wellbeing. And hence, many naïve investors like Harry and Suhas blame the market when they encounter losses.

Some are even intimidated with the idea of sharing personal details, trying to manage everything all by themselves. But the fact is, you need to have an in-depth knowledge and correct approach to sail through market movements and emerge as a winner. You need a financial doctor to treat your financial ailments (debt trap, failure of achievement of goals) so that your financial health is taken care of.

You see, fee-based financial planning offers a host of advantages…

Unbiased opinion

If a financial planner is charging a fee to draw up a financial plan without any obligation of making investments through it, chances are that all the recommendations he/she provides you with will be unbiased.

But, if a financial planner is giving you a free financial plan, alarm bells should go off. He/she may have ulterior motives to provide this free service. Most of the time, their recommendations will be biased and driven by the commissions they could earn. These recommendations might or might not address your investment objective(s), financial goals.

Mind you, there are no free lunches! Nothing comes for free. If a financial plan is offered to you for free, the quality of this plan is questionable and poses a risk to your financial wellbeing. This is because the planner offering such a plan could be pushing financial products unsuitable for you and to your financial wellbeing. On the contrary, these might be in his/her interest (through big fat commissions!) leaving you in the lurch.

The services provided should be fee-based to ensure that commission income does not influence their recommendations.

Professional Relationship

Financial guardians handhold you in the path to wealth creation and your financial wellbeing. As mentioned before, they illustrate high fiduciary standards and professionalism, which is a trust building factor amidst time where trusting people, has become increasingly difficult. You can ask pertinent questions to a financial guardian, a fee-based financial planner and he/she will be glad that you asked and happily answer to the best of his/her ability keeping your interest in mind; which otherwise with friends or relatives can be challenging. Moreover, the emotional bias is rule out.

A High-end customised advice

A financial plan offered for free might be a standard service, aiming to push financial products that chart a comprehensive path to accomplish the envisioned financial goals. For example, you and your best friend approach a financial planner, he/she might create the same plan for you. This might not work for you both as individuals. Each one has his/her own goals, risk appetite, preference, etc.

Remember, your risk appetite might not be as same as your neighbour’s. Hence, you need a tailor-made financial plan. Your risk appetite could be far different than your friend or relative. Remember, one size does not fit all.

A fee-based financial plan will provide you with customized service which can be altered as per your needs, change in circumstances; enabling you to accomplish your financial goals.

After sales support

Please note that entering into an investment is just the starting point, you need to judge whether your financial advisor provide prudent and reliable after-sales support.

A financial guardian who is easily accessible, and who literally handholds you in the journey of fulfilling your life goals, with the much needed prudence and empathy is generally the best option.

Keep this in mind…

If we recognise the facets to be considered while selecting a prudent, independent, and unbiased adviser, you’ll understand that selecting a good financial planner is like selecting a good spouse in many ways — one who will stand by you through health and sickness.

At PersonalFN, we always follow high fiduciary standards, and put your, the investor’s interest at the fore. This is in our DNA, and it will always remain. Here’s what some of our clients have to say about us…

Unbiased advice on the basis of thorough research process. It is always a pleasure to read all articles posted by PersonalFN which are very informative, clear and concise to the point. During the creation of my financial plan, the team was very responsive, attended to my concerns and clarifications very well. Overall very happy with the service provided to me by PersonalFN and would definitely recommend it to anyone.

- Joseph Samuel, Mumbai

I researched the services of a CFP and zeroed in on PersonalFN. I found the Investment Consultant from PersonalFN very helpful, attentive, and easy to understand. He was open and honest and suggested products to me without any ulterior motives attached. Using the income and outflow, PersonalFN showed me how I can reduce my liabilities and build my insurance, contingency, leisure and retirement portfolios in a structured and sustained manner. It is definitely an organization I would recommend to my peers and family.

– Kaushik Iyer, Mumbai

PersonalFN is a SEBI registered investment advisor. The fundamentals we firmly believe in are:

✔ Client first philosophy
✔ Confidentiality of your financial data
✔ Handhold you at every step in your financial planning process
✔ Unbiased recommendation backed by more than a decade long research experience
✔ Disclosure of any kind of income we earn from you
✔ Aim to establish a long-term relationship with you, rather than just a financial plan

Schedule a call with investment consultant now and start your journey towards financial freedom today!

Happy financial planning & investing!

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