Financial advice has always been free... or so you think! The people whom most of you might have been approached were agents or distributors, who had products to sell. They were willing to talk to you and offer “advice”. But, what can you expect? If the only way the agent can earn is through commissions embedded in the products, you should be prepared to be sold products that rewards them wonderfully – and could take them to Paris &; Pattaya, when they achieve their targets!
When Free advice is costlier than paying a fee -
That’s why we meet clients saddled with a dozens of endowment plans that mature every year in retirement. The spiel which sold the product was that this is good laddering to take care of requirements in retirement. But what was left unsaid was that this product offers 4-6% returns and there were much better products with which to shore up the retirement years! Such a strategy would cost a person lakhs of rupees in lost corpus accumulation! The agent gets the best commission in this product. The client did not pay a fee – but paid very dearly anyway, indirectly!!! Such cases are very common in our country.
Also Read: Good advice can make all the difference
Poor outcomes -
Paying for services -
When we step out of our home, we hail a cab and pay for it. We have snacks in the hotel or treat the family at a restaurant and without a word, we pay for this. We are used to paying fees to doctors, lawyers, CAs, architects etc. Back home, we watch cable TV, for which we pay too. In short, we pay for everything we use.
We even pay for things which do not give anything tangible- like taxes - as there is no choice. The government tells us to hold our head high & pay taxes! Tax is a “service charge” for the privilege of being a citizen of the country, hoping & praying for “good governance”, which of course is as elusive as the blue moon sighting!
Paying for financial services –
These payouts you are making indirectly add no value to you. Lot of times they detract you from your goals as the investments done in this way have been done based on sales push & is not borne out of actual requirements.
So, why not engage proper advisors to advice you on finances and ensure you take proper decisions in line with your requirements?
Engaging financial advisors -
One will need to pay a fee to such advisors, just like one pays to doctors/ lawyers. Firstly, a good advisor will ensure that wrong decisions, which will hamper a person throughout life, are completely avoided.
Secondly, a good advisor would study one’s requirement and suggest low cost options to achieve the goals. The focus is on achieving goals. Engage the services of Fiduciaries.
Thirdly, a good advisor will optimize the investments in line with one’s risk tolerance levels, asset allocation requirements, goals, taxes, tenure & liquidity needs, return expectations etc. and ensure that the returns are optimized. The recommendation would be tailor-made for the client.
All these will ensure that the client will meet their cherished goals by deploying their finances optimally
Paying financial advisors –
What people need to understand is the total cost of financial services & not just whether they are paying directly / indirectly. The Indirect route is far costlier as agents palm off costlier products for their own pecuniary gains. One needs to get used to paying directly for advice, like we pay other service providers.
The services of financial advisors can be had for much less and is certainly life altering. Their advice has the potential to transform one’s financial life. A good advisor would sort out the chaos, lay down the path to financial freedom and ensure clarity & peace of mind for the family.
That’s priceless – you would agree!