Last Updated on Apr 11, 2022 by Aradhana Gotur

Investment Manager with over 19 yrs of experience in managing HNI wealth. Founder Partner for Augment Capital Services LLP with over Rs 400 cr. of AUM.

Needless to say, the world that we are currently living in, is a testament to the digital age. Since the inception of the internet, the way we consume information has effectively changed forever. With millions of outlooks and data points about any given topic at our disposal, the world is literally at our fingertips. In such a scenario, assume that you are a young professional who has just started to make a living. Chances are, you already might have given some thought to your retirement plan or avenues to augment your earnings.

Imagine yourself being caught in a dilemma about whether you should invest in the Employees Provident Fund (EPF) or simply set aside your earnings to step up your investments via a systematic investment plan (SIP). I see a conversation like this going one of two ways – either you would be able to argue by giving a definitive opinion or you would first have to read up about what SIPs and EPFs are, in order to make an informed decision. If it’s the latter, then chances are, that you could be better off employing the services of a financial advisor.

Do It Yourself (DIY) investing or financial advisor?

While a major demographic has been engaging in DIY investing for the longest time, it does not necessarily mean they’ve been doing it right. Finance, in itself, is a field that comes across as daunting to the uninitiated. Add to it the prospect of mastering the art of personal finances, things are bound to get challenging. And these challenges are what financial advisors can help you overcome.

Realistically, not everyone can be equally adept in matters concerning investments and finance. But it is downright risky and imprudent to undermine the importance of being able to efficiently manage one’s personal and household finances. This is exactly where financial advisors come into the picture.

The role of a financial advisor

Just a disclaimer, the role of a financial advisor exceeds that of just executing trades on behalf of their clients. These professionals are artfully adept at playing around with all possible permutations and combinations in order to tailor a financial plan best suited to the goals and constraints of their clients. A financial advisor can guide you in assessing your savings structures, insurance policies you need, investments you can park your funds in, or the kind of deposits that can help you exact the maximum possible returns.

The world we’re living in is increasingly dynamic. In such a scenario, it is important to be ready for any unforeseen circumstances that may arise – be it a medical emergency or even economic recessions for that matter. There are several events that could trigger the need for the services of a financial planner. For example, one might have received some windfall gains and might need advice on what to do with the money, or another person could be nearing retirement, and simply wishes to assess their financial standing to better plan ahead. However, starting early is almost never harmful. So it is advisable to take charge of your finances early on- with or without an advisor.

Stay ready with a financial plan

If you wish to try your hand in, let’s say, equity markets, you might do so on your own. But what a financial advisor brings to the table is years of experience analysing the fundamentals of the market to figure out the best possible companies to invest in.

DIY investing is a perfectly reasonable way out, but if your financial plan involves a lot of Googling and just being swayed by the general market sentiment, it is better to hire an advisor. Moreover, when it comes to making major financial decisions, such as buying a house or taking an early retirement package, an advisor would be able to better assess your financial position, taking into consideration your assets and liabilities as well as your incomes and expenditures.

A well-drawn-out financial plan has the potential for you to shield yourself against, most of all, inflation. Moreover, it could help you prepare for stress-test simulation, which in turn would help you ensure that you don’t ever run out of money, even in the direst of situations.

In a nutshell

A financial advisor can assist you in exploring the wide array of investment alternatives at your disposal, and help you achieve your end goals in a much more efficient manner. Moreover, a long-term association with an advisor ensures that your plan can adapt and evolve alongside your living conditions, so as to ensure that you’re better suited for what’s to come in the future.

All in all, whether you’re a high-profile business executive or an average Joe, if you are not well-versed in the art of personal finances and how markets work in general, signing up with a financial advisor is the most prudent way out.

Anand Rathi
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