DO YOU NEED A PLANNER?
Yes, said Ranjeet S. Mudholkar, vicechairman and CEO, FPSB India, a professional certification body for certified financial planners. “What the financial planner does will be like a pathological test for you. You might be in perfect health, but still a doctor might order a series of tests to ensure that you are in perfect health. Even if you feel perfectly fine, the tests are required nonetheless,” he said.
But there are some who believe that not everyone needs a financial plan. Shyam Sunder, managing director, Peakalpha Investment Services Pvt. Ltd, said that sometimes people just need a little bit of guidance to start them on the right path. “Financial planning is like a sledge hammer. If you only have a small nail to hit, it might be too powerful,” he said.
If you have just started working, or have no dependants or liabilities or your life is not complex enough, you may not need a full financial planner. At that stage, putting in place a few basic things may sort you out. Similarly, after retirement, when you have achieved most of your financial goals and just need to protect your assets to get regular income, small professional interventions may be enough for you. “But apart from these two sets of people, for the other 80% of the demographic, financial planning is highly recommended,” said Sunder.
Though experts stress on the need for a financial plan, it should never be done with the sole purpose of maximising returns. “It should be for optimising investments and avoiding mistakes especially in the initial phase of one’s career. Even if we invest ₹1.5 lakh a year, if done in the right way, it could make a huge difference when compared to making the same investment in inappropriate products,” said Melvin Joseph, a Sebi-registered investment adviser and founder of Finvin Financial Planners.
Planners can also advise you on the suitability of a product. For instance, a lot of people in the middle of their careers approach financial planners with investments in products that don’t suit their life stage. “This happens with a lot of people and they are losing huge amount of money due to that,” said Suresh Sadagopan, founder, Ladder7 Financial Advisories.