Some days back, I have been receiving critical feedback from one and all, my graduation classmate from Chandigarh who commented on my mail “it’s better to any individual just seat out himself/herself give time on himself/herself ,just calculates what he/she earns & what are their expenses, then plans himself what is his/her future responsibilities. In this way he/she can fulfil all his/her responsibilities”.
In order to counter these comments, I would say that there would be enough people in this world who think and would like to be “Do it Yourself”. They may have good knowledge and understanding and may have self take care of their financial matters to great extent. Managing your investments may be simple but it is not easy. You need to clearly understand that if you are capable enough of devising a low cost yet effective investment plan then you are smart enough to handle your portfolio. Apart from the monetary factor, there is another issue which should be taken into account. You should be aware of your priorities. Ask yourself, if you want to spend more time with your family than you want to on investing then better hire a financial planner.
Hence, it’s easier to say that people have been able to achieve their responsibilities. But have we asked them how many sacrifices they had to do by ignoring their hobbies or things that they always wanted to do but could not due to pressing issues of family needs.
Another Person, Mr Sharma, commented “I feel that any planning will be fulfilled only when you earn sufficiently (regularly) so that, financial planning is for high earning guy, otherwise it is tough to bear additional cost to planner.”
I would like to tell Mr Sharma that, one does not mind to pay Doctor Fees, Architect fees, Lawyer fees etc. irrespective of the fact that how much one does earn, and still one pays the fee.
It’s like if you fall sick then you have to pay for medicines. No questions asked!! Either pays and saves yourself and be happy OR just live in hope of it getting cured by itself or with self medication but it will actually get worse and one day, it may kill you.
Let’s understand how people oftenly; pay the fees irrespective of their earnings?
People buy an arbitrary ULIP insurance policy with a premium of Rs 50,000 per annuam because the salesman was really persuasive or some uncle (or dad’ close friend) happened to be an agent and sold a policy to save tax and secure future. If that person is in 30% tax bracket, he will save Rs. 15,000 in tax. But if that was an ULIP with a 50% premium allocation charge( which is the case, quite often), Rs 25,000 is lost the moment one signs the document and this amount would go in the pocket of the agent in the form of his first year commission. So one saves 15k and loses 25k as charges! One has, actually paid indirectly fee to the agent for buying biased product, still he is happy to pay him and considered as good investment instead of expense. And yet, these are the same people who say “10K for a financial plan-too costly!”
Another guy wrote on my mail “As I have seen in my childhood, earlier days there was no tradition of fin planning then people also have completed all their responsibilities. Now the problem is only one that no one has sufficient time for himself/herself, so they just hire someone who take care of his/her responsibilities.”
It is very much true that in quite past there was no need for financial planning when there were no choices other than LIC polices and FD’s. The education was cheap, no competition got exists, every one’s desires were limited and people were happy with their limited environment. They use to live in joint families and every member of family was ready to get financial help for his family. There was no major impact on their lives from inflation and taxes. In those times, Fathers generally did not handle money in right way because of lack of knowledge and a different attitude.
Hence, they had absolutely no clue about financial planning, but things have, now changed today and we are living in a new age world which has added pressure, high expectations from life, Education needs lacs today, the costliest one is for the kids these days, forget adults. People are eating out more, people are spending more, choices are more, want more (not need more) and to achieve all that we need to grow our more smartly. With these changes of financial scenario and paucity of time now a days, it has become inevitably to have the help of a Financial Planner in every financial matter.
Hence, more choice often leads to lesser ability to make good decisions and investors can make the classic mistake of spending too much precious time on money when they could be spending it on higher priorities, such as family, health or personal goals.
Measure the Value of Time
How much is your time worth? Have you calculated it? What is your return on investment (ROI) for the time invested in financial planning? What is the non-financial cost of money? For example, if you are at least as successful as the average professional money manager you may receive returns just slightly higher or slightly lower than Index fund. In other words, unless you truly enjoy investment research or the process of financial planning, the extra time invested may not be worth the financial outcome.
I am not trying to underestimate the exercise of “Do it yourself”, but I am trying to highlight the importance of embracing the financial planning process by consumers – either ways.
If Your Needs Are Simple, Do It Yourself (With Caution)
There is, however, a significant caveat to the do-it-yourself path: Money is one of the most emotion-provoking things on earth. You must be able to avoid your worst enemy–yourself–by not succumbing to the normal and damaging emotions of greed, fear, complacency and hubris. An investment advisor or financial planner can think about your money with little or no emotion but you may not be able to separate the two, at least if you are normal.
Make the Best Choice
There are many benefits of hiring an “outside professional” viz. a viz. “doing it yourself.” You may be competent to manage your money yourself, but the question is “Are you currently doing it yourself effectively in the right way?” Most of us suffer from “procrastination” syndrome and never do it themselves until it’s too late.
Secondly it has also been seen that many of us, though may be having some kind of a hazy strategy but they don’t have a written financial plan in place which helps in getting a complete grip on current finances and clarity on future goals.
Third, doing it yourself creates many blind spots and personal biases which an outsider can bring out during the course of financial planning process. And fourth, when you do it yourself you need a high level of self-discipline and create accountability for acting on your financial plan.
Irrespective of whether you can do your own financial planning or not, there is immense value in bringing in a competent and trustworthy professional to analyse & advice you on your finances & goals.
It’s you who have to answer how your Financial Life must be, “Not Bad” or “Excellent” & “Perfect“!
Having said that, I think the same people will approach you for professional help either when they feel they can afford your services or need a second opinion and most importantly refer people around them who are not doing it themselves.
After evaluating all the above factors, you may decide and try to do it yourself or seek a planners help. Alternatively you may try yourself for sometime before turning on for external help. But, start somewhere & take the first step towards having a plan in place!
Conclusion
Majority of Indians are totally still, clueless about financial planning and only it has happened that in recent years some awareness has been created about it. Again, whether you do it yourself or you use an expert, as choosing a planner. The question boils down to this: Do I want to hire myself or do I want to hire someone else? Therefore it is important to be honest with yourself and check your humility as you don’t need a salesman–you need an unbiased advisor that is paid by no one else but you.
Suresh Kumar Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner’s Guild, India. He is also a member of Financial Planner’s Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in