Many people have asked me this question:

Should we invest direct or through an advisor?

Like every economist or a CA I will also start by saying – ‘there is no yes or no’ kind of an answer. It depends on the following:

– were you investing in 1999, 2000, 2008, 2010…..? then you may not need an adviser.

– will you spend at least 3 hours a week reading about mutual funds, economy, company results, personal finance articles or are you busy with your social life, watching television, hobbies, etc  – then you may not need an adviser.

– will you invest in LEARNING before you invest your money – then you may not need an adviser.

if your answer to any of these is NO, you should have an adviser.

Your adviser should be able to do all this, help you with the form filling, annual review, asset re allocation based on some time based goals, changing your SIP amounts based on your goals, tell you when and how to change your term insurance policy, advise you regarding nomination, making a will, broad asset allocation and tactical asset allocation, …..

AND you think he can get you about 1% more than what you can get on your own, he deserves to be your adviser.

How much should be his fees?

I have heard a huge range of fees – everything from 20,000 Rs. to Rs. 5,00,000 – and frankly I feel all numbers are justified depending upon the client!

Largely for portfolios upto Rs. 2 crores: go through an adviser allowing him to earn a commission.

Portfolios of Rs. 5 crores and above : go for a fee + direct application….

 

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  1. Agree that one needs an Advisor. However would like to know whether to approach an Advisor who offers all the services under one roof I.e Equity, debt, MF, Insurance, real estate, taxation etc. etc.

    I look at it and compare it with Doctors. If I have heart problems I go to cardiologist, if I have skin problem I go to dermatologist and like wise. I do not go to GP for this.

    So is it fine if I go to single advisor for all my advises. Be it investment, insurance, real estate or tax planning?

    Is it not worth having dedicated advisors who is specialist in his own domain.

  2. Advisors are chosen on the basis of complication. A simple advisor may be able to do form filling etc. but may not add too much value in asset allocation etc. similarly a simple guy may be able to file a salary return – however if you have a lot of transactions in shares, real estate, dividends, tds on interest, etc….you may need a CA who can file a complicated return…

  3. So basically one can not and should not have common advisors, right?

    One shoul opt for an Advisor who is specialist in his own domain. ..right..sir ?

    because CA can advise on taxation and can not on investment and asset allocation. Same way investment advisor can advise on investment and can not on taxation.

    Many people are not opting for fee base advisors simply because they claim to have knowledge of all these and charges huge fees. And then when it comes to execution they just fumble.

  4. Is it a good idea to have Fee based financial planner do the MF advisory role for both equity and debt ?
    Once done, let investor buy equity portion through Financial Planner and debt through say Fundsindia ?
    This will keep him interested to do the advisory as well as give him some portion of the commission.

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