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What does a Financial Planner do that you couldn't do yourself?

Anmol Gupta

In theory, you could almost do everything that a financial planner does, but just like you could learn how to treat flu. In the end, can you actually fix a broken bone or learn to do it yourself? Like a doctor is to your physical health, a financial planner is to your financial health. You could Google the symptoms of flu and try to cure it, however, there is no guarantee that you will be able to fix it all by yourself and that it won’t relapse. Similarly, when you try and implement the tasks of a financial advisor, there is only a chance that you can take care of your finances and secure them as they should be. There is no guarantee. And, none of us like to be unsure about our money, do we?

Financial Advisors for Better Management of Income and Expenses

To be more precise and substantial as to why you would need a financial planner as opposed to doing it yourself or learning to do it by yourself, let’s just start by highlighting the fact that a financial advisor, with years of learning and expertise in the matter, is more capable and efficient in managing your income, whether it is planning proper investments, helping you with filing tax returns, or any other expenditures and savings. They also help in keeping a track of your spending habits and cutting down on unnecessary expenses so you can have an increased cash flow.

Financial Advisors for Better Investment and Planning

With increased cash flow and more money at your disposal, your financial advisor can help you in considering more investments that will ultimately raise the standards of your financial well-being. Let’s talk, for instance, about mutual funds. There are 1000s of those in the market, and if you were to trust the representatives that these agencies send out to you, you will end up investing in a dozen per day! So, unless you are a finance guru, how do you differentiate between the right and wrong? Also, how do you know what is right for your colleague or your friend will work out for you as well? Well, you don’t. Your financial advisor is skilled to create the best mutual fund portfolio for you to investment. They can also help you rebalance your mutual funds portfolio so you can properly return your current investment allocations to your original investment allocations.

Financial Advisors versus Stockbrokers/Agents

An important thing that I should mention at this point, in case you were already wondering, a financial advisor is not the same as a stockbroker or an agent who charges you a fee for their services as well as a commission for the financial products they sell to you. In India, all Registered Investment Advisors are fiduciary. This is one major legal difference between them and the rest. What this also means that your financial advisor is bestowed upon with a legal responsibility to act in your best interest. They are allowed to work on a fee-only basis and no additional commission for any sale of financial products. Financial advisors, as compared to brokers and agents, work with third-party professionals to bring you the products and services that best suits your needs, without any commission–splitting involved.

Like I said at the very beginning, you could probably learn to do all this as well with years of learning, but is that what you would rather do with your spare time when you can already have certified financial advisors do to it for you?

Originally answered on Quora.


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About the Author
Anmol Gupta
Anmol is CEO at 7Prosper. He is SEBI Registered Investment Adviser, with expertise in Finance and Technology domains. Anmol is committed to help people achieve their financial freedom.

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