In the personal finance field there is this classic dilemma of DIY (Do it yourself) Vs Choosing a Fee Only Financial Planner Vs Going to an insurance or mutual fund agent? Is it your Dilemma too?
In an answer to a facebook post describing the dilemma of anyone who does not have interest or knowledge of personal finance like some of us may feel handicap today's ever changing technology world! here were my two cents to the conversation.
First of all, all the three categories described above may seem exclusive from each other and there is a general feeling that if you are doing or are associated with one, you do not need the other. But in my opinion and as per experience, to have a sound 'Financial Landscape' (Your financial landscape consists of personal, professional, health and financial situation) and a confident and peaceful life...You need all of them!
Let me explain, you need to get involve in DIY meaning ...Understand basic terms, so that you are able to differentiate between Mutual fund and ULIP or insurance and investment so that you are being emotionally coerced into just signing up the dotted line.
Why go to a Fee Only Financial Planner:
You Can Choose to go a Fee only Financial Planner, who will help you see your Financial landscape from strategic angle.
He or she will identify not only what is visible like you assets and liabilities, responsibilities and health but also help you see through your Emotional or Behavioral understanding and comfort level with your Financial Landscape. As Emotions do play a big role in our decision making process.
He or she will help you understand what you Want and what you Actually Need and what is the Reality...means the Big picture of your Financial Landscape.
He will chart the path for you to follow which will not only help you achieve your goals but will also save you from taking decisions Detrimental to you.
He will also lay an action plan for you which may or may not comprise of Buying or Selling certain financial products (as per the need ...your may not need any product sometimes).
Also the Financial Planners (Fee only or Fee based take it as their prime responsibility to educate the clients on personal finance...It is one of the Ethical responsibility they assume while being awarded the CFP certification).
Why go to an agent who sells financial product:
The last part, if you are choosing a Fee Only Financial Planner, they will not help you with the administrative job like filling the form and actually dealing in the financial products. Because that would have been the prime reason for you to choose a Fee Only Financial Planner...ie, No association with any Financial Services company hence No Conflict of interest!
So you are left with two options either you can take charge and deal in the products yourself as your Implementation plan is already being laid by your Financial Planner or you can take help of an Mutual fund advisor or Stock broker or Insurance agent or Lawyer or Tax advisor to help you with the administrative job. They do understand the nitigrities of the paper work and also some of them do have sound knowledge of the financial products they are dealing into...in any case you have your Financial Planner to go back to for any suggestion before acting upon finally.
Doing all this will take away a lot of burden off you! Before choosing any of the ways you can get in touch with Clients of Financial Planner or if you choose to go ahead with the other advisors, you can speak to their clients. But even to have these conversation you have to DIY
The second part...Financial Planning is not Investment Planning alone!! Choosing a financial product is the outcome of your financial plan. There may be times when you may NOT NEED any Financial Product at all.