Thoughts on financial advice

by Manshu on December 7, 2011

in Opinion

I’ve read a number of articles talking about paid financial advice lately, and I get emails from readers asking about some services as well, and I’m writing this post as a result of those questions and what I’ve seen here over the years.

My general impression is that good financial advise is rare, and when available it is not easily affordable.

I have interacted with a large number of people who call themselves financial advisers in the course of writing this blog, and my perception is that a lot of them have no clue of what they are talking about.

There are people like Shiv, Hemant, and Furqan who are extremely knowledgeable, and also unbiased, but for a lot of others – I wouldn’t take their advice if they paid me, let alone me paying them.

If  you end up with one of these advisers then you are screwed out of your money because most often, the folks who know little are also guided by fat commissions and will suggest only those products that will fatten their wallets the most.

I also think that you need to figure out a lot of this stuff on your own. If you really want to be financially successful – you have to have some things figured out like the importance of having no credit card debt, value of term insurance over other plans, benefits of diversification, asking about risk when someone talks about returns, and other such important things.

They are simple concepts if you are willing to give the time to learn them and there is a lot of information already available for free in the public domain about these topics.

If you understand these things then you are already quite ahead of the game and if and when you do take financial advise – you will be able to extract the maximum out of the consultation and really benefit from it.

You don’t need paid advice to tell you that you should have zero credit card debt or that you should have some money in equities or the benefits of diversification, but if you don’t know about these things then your adviser will need to spend time to explain these things to you and that’s time taken away to move on to more advanced things like planning for goals and all that good stuff.

This is not to mean that there is no value in financial advise – I truly believe there is and that’s best showed by a comment Deepak left here some time ago. Let me reproduce that here:

Hi Manshu,

I would like to take opportunity to thank you for giving Nisha a really wonderful gift
(comprehensive financial plan by “Hemant Beniwal”), this is just not worth Rs 15000, it is really undervalued b’cos this is a gift for the lifetime.

I must tell you that Hemant is really a true professional to work with, he has immense knowledge in the field and his concepts are really very clear, he has given very clear paths to achieve our goals. He got so involved in the plan..I felt that my elder brother was teaching me the way of taking financial decision in life..thank you Hemant for great advice and i’ll always remember ‘if you can have honeymoon in manali don’t think of goin to Mount everest.’

I would once again thanks “One Mint” for giving our life a great direction. I wish you both all the success in life.

Kind Regards
Nisha/Deepak

Clearly shows the benefit, and in my view you will benefit from it when everything falls into place – you meet an adviser who is knowledgeable, has a long term approach, most likely such a person will have a good fee, so you should be able to afford to pay the price, and finally you should have a lot of the basic and important stuff figured out already so you can make the most of your consultation.

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