This is arguably the most important financial decision in your life you will ever make!

Not too long ago life was simple. You wanted a bank account, you went to a bank. If you wanted to buy shares, you went to a sub-broker (a broker was out of reach till about 15 years back). If you wanted a life insurance, a LIC agent sold you some policy which you hoped was good.

Today you find bankers who actively discourage you from coming to a bank. Insurance agents who sell you anything buy a life insurance product. Bankers who sell you mutual funds, life insurance, brokerage accounts, and real estate!

And you have websites like Subramoney that if you know how to select a good IFA to help you and you know how to evaluate him, you can do your financial planning yourself.

Now into this alphabetic soup of financial qualifications…how do you choose a financial consultant / planner / adviser….or what have you..?

And the companies that sell you financial products are dime a dozen – Reliance (Mukesh) has a loyalty card, Reliance (anil) has a credit card. A call from Reliance Money says “Reliance Bank” and offers you a loan! Airtel offers you money transfer, cell phones can be used for paying utility bills. Why do I need a bank, a cheque book, a relationship manager? I do not know!

Now into this mess comes in a financial adviser. He should tell you the difference between information and noise. He should encourage you to write down your goals. He should be able to understand the difference between a 3 month track record of a scheme and a 3 year performance. He should be able to FORCE you to buy life insurance MUCH BEFORE you need it. Your pension plans and medical insurance plans should be in place when you CAN rather than when you must. He should be able to help you prioritise your goals. He should have the guts to tell you that your goals make sense only when you allocate resources for the same.

HOWEVER, he should not sell any products to you EVEN if it is a zero load mutual fund. Because then, he loses credibility. It is like a rep of a pharma company – I cannot trust him like i trust my family doctor. Sorry, I know this is an old world view.

So what should he do?

How much should he charge?

How are you going to decide all that?

Will you pay him even in the 2nd year he says “everything is fine…do nothing” ?

Do you pay for his intervention or just to say “you are fine”?

How do you know that he is correct?

Should you go to one financial planner, get a plan made and get it checked by another planner?

Or should you create your own questions and answers?

Well, my job is just to confuse you….go and find the answer and write it in the comments…section..

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  1. Having recently obtained the services of a fee-only financial planner, I cannot agree more about the choice of a financial planner being the one of the most important choices one will make in their financial lives! I was lucky in that I had/have an excellent rapport with my advisor. But having said that, just because you have an advisor doesn’t mean you switch your brain off and blindly follow him. I constantly strive to educate myself [subramoney and freefincal are two of my top rated resources] and I engage with him regularly to
    better understand some of decisions we have taken in the past and to fine tune the road map for the future. This being the first year of our association, I am certain I will continue with his services even after our current contract expires, even if it just to have someone to hold my hand while I learn to navigate my newly discovered world of Personal Finance!

  2. Not too long ago life was simple. You got married, boom within a year you got a baby. the official party line was we 2 ours 2 but nobody listened to it. Rajkapoor and nargis were brand ambassadors of a govt condom brand

    today you find people “figuring themselves out”, “settling down”, “seeing the world”. There are 21 condom brands. You have fertility clinics, birthing boutiques, TV shows by obgyns.

    Now into this mess comes astrologers, alternative medicines, people asking you to roll for 48 days in a remote temple.

    Birthing has given birth to a huge business.

    so what should you do?

    End of the day, if YOU want a baby, YOU should do the “work”; Somebody else cannot do the work for YOU.

    same with your hard earned money

  3. Never wrote to you but I have started checking into your blog once a day to read your posts (I do not mean to sound patronising but I obviously enjoy reading your thoughts of the day). I have a question and here it goes:

    I realize buying a term insurance is a common sense thing to do. However in my case, I have no dependents (wife earns more), or debt and I have been wondering for a while if I should buy life insurance (am in early 40s). I have the max health insurance coverage as allowed by the govt insurance companies, and I have a sizeable savings, though nowhere near to retiring. I apologize if you have covered this before.


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