MAKING THE CASE FOR FINANCIAL ADVISORY IN A CULTURE THAT RESISTS SPENDING MONEY ON IT

According to research conducted by Charles Schwab in the USA in 2020, 72% of households do not have a written financial plan. Only 40% of them have undertaken some amount of planning but not at a formal level, while the rest have made no preparations at all. The figures are still lower in India! This shows an evident pressing need to make financial advisory accessible to the masses. In recent years, many stakeholders have put considerable effort into spreading financial literacy.

Every individual must have a financial plan tailored to their risk profile, family history, cash flow, liabilities, and financial goals. Given the dynamic nature of one's income and aspirations, regular analysis and revisions to financial plans are inevitable. Being well-versed in the latest developments in economics, finance, technology, taxation, and other nuances of investing is imperative. 

The seemingly complex and time-consuming nature of financial planning makes many people shy away from it or seek the help of experts. Financial advisors are significant here who, like doctors, understand the history, current problems, and future expectations to propose a plan of action.

I recently met Rahul and Sheena, who found the entire financial planning process to be really dull. Six months ago, they welcomed their first kid, and since then they've come to terms with the fact that a good education doesn't come cheap. Within ten minutes of the meeting, there was a realization that their financial health was not good enough and that numerous corrective actions were needed. It was their mind that I had to work on before their money. By the eleventh minute, I ruminated about how DIY apps and Robo-advisors have made people believe that, like other complex functions, a program or formula can easily help them simplify financial planning and make it fun by using an app at no or minimal cost.

Working with numbers is an integral part of financial planning, which a program can do wonderfully. However, getting into an individual’s mind, helping him shape his choices, discovering his goals, and hand-holding him in difficult times is the crux of financial planning.

A successful financial plan is a combination of a high intelligence quotient and a high emotional quotient. The 'human factor' is very important here, as artificial intelligence does not have an emotional quotient as yet. All of us pay our medical doctor in spite of having access to health-related information from Google. So, why is it so hard for many to even consider paying a financial doctor to take care of their financial health?

THREE FACTORS THAT SHOULD MOTIVATE ANYONE TO PAY FOR FINANCIAL ADVISORY SERVICES:

1. You Feel "Lost" In Planning For Your Financial Future And Need A Roadmap

Many just starting out in life with limited financial resources find themselves trying to balance priorities such as paying off student loans, purchasing a car, building an emergency fund, supporting parents financially, and saving for themselves to enjoy life.

2. You Just Don’t Want To Deal with Managing Your Money Yourself

When it comes to money, you’re not the DIY type, and you just want a professional to take care of it. Some people hate managing their money. That's fine, as long as you acknowledge the problem and hire someone else to fix it.

3. You Like Managing Money But Would Benefit From An Expert Opinion

Realizing your financial plan would benefit from an impartial and unemotional third-party opinion can improve your finances. No matter how much you learn about investing, you’ll always be human and, therefore, susceptible to making irrational decisions.

Paying a financial advisor can save you from making a bad decision or help spot an opportunity that you overlooked, leading to an increase in your investment returns to an extent that was not possible without a financial advisor.

Author:

Binoli Dodhiwala Jain

CEO and Co-founder 'The Money Mart'