The term financial planner is used often and very loosely. In India you have many people calling themselves financial planners. The insurance agent, the mutual fund distributor or your friendly neighborhood retiree, all call themselves a financial planner. And most often they are behind you and want to invest in some financial instrument; either stocks, mutual funds or insurance policies. Sometimes they don’t stop until you succumb, give in and invest through them.
What is Fee Only Financial Planning
Locating a qualified financial planner can be a tricky exercise and more so to find a planner that has your interests as paramount. You want a financial planner you can trust but also want to ensure that you don’t get ripped off by hidden charges and commissions that can sideline your goals.
Fee Only Planner helps you overcome this fear. In Fee Only Financial Planning, the only person that pays the adviser/planner is you. The adviser’s sole remuneration is the fees paid by his clients, instead of receiving commissions or other forms of payments from product manufacturers. This provides you relief that you are working with an adviser and not with a salesperson trying to sell you something.
Why Fee Only Financial Planner
Free of Biases – The Fee Only Planner does not have any incentive to recommend any particular instrument as they are not paid any commissions based on how many or how much clients invest in them. Since fee only planners get a flat fee for the advice provided, you can be sure that there are no biases while recommending investment instruments. A fee only planner has unlimited investment choices that can be tailored according to the needs of the client.
Clarity of Fees – Working with a Fee Only Planner makes you completely aware as to what services you are paying for. This departs from how an agent gets remunerated; the agent gets his commission from product manufacturers and is rewarded by selling instruments that offer higher commissions not the ones that are best suited. A fee only planner protects you from products that are not suitable from a risk return prospective, liquidity, taxation and others.
Accredited Professional – SEBI (Securities Exchange Board of India) which governs investment advisory in India, mandates that all advisers to register and qualifies them to be worthy only after stringent measures are met. At present, India has only close to 1300 of these. And even among them not everyone follows a Flat Fee Only Financial Planner practice.
You are the Focus – Since the fee only financial planners are not dependent on commissions from instruments and is being paid for the advice provided, they are more focused to provide solutions that help resolve the client’s issues. A fee only financial planner will not hesitate to tell you to clear your personal loans or other high cost loans first before you start investing. A traditional commission oriented adviser would not gain anything by you becoming debt free.
Cost Efficiency – A flat fee only financial planner does not charge you on the basis of your investment amount. In comparison, brokers get commissions as a % of the investment amount; large the amount invested higher the commissions earned by them. Fee only planners charge depending on the complexity of individual circumstances and not on the invested amount.
Fiduciaries – Fee only financial planners stand as true fiduciaries. They are mandated by SEBI to serve the investor’s interest first. They are legally responsible to keep the client’s interest first which ensures that they follow a 360 degree approach before providing recommendations.
Connect With a SEBI Registered Fee Only Financial Planner to Understand how you can benefit and achieve your financial goals.