Q2.What does a financial planner deliver, and what are their charges?

A financial planner not only deals with the client’s numbers about his/her income or expenses but also goes beyond that to deal with their emotions, fears, and anxiety.

• Role of a friend in need – as the planner possesses details of the client’s finances, he holds a unique position to judge his financials in an unbiased manner and treat his anxiety when the markets are unfavorable and control his greed when the tables have turned favorably. He can also pacify and alleviate the fears in the minds of his clients through a proper explanation of his concerns. This can prevent the client from becoming trapped in the vicious circle of hope, greed, and fear by making informed, prudent decisions. The peace of mind helps the client increase their productivity, as competent persons handle monetary concerns.
•  Making the appropriate product choice – Clients need to purchase insurance to protect against the loss of future income and select investment products that can help them achieve their long-term financial milestones. Very often, clients are carried away by peppy sales talks and high return promises from salespersons whose only intention is to sell the product. The planner analyzes the product in minute detail and advises the client to make a prudent decision about buying or dropping it. He considers the suitability of the product after taking into account the broader picture and adopts a holistic view of the clients’ financial status. He acts as an antivirus to the clients’ financial data and quarantines harmful objects.
• Increasing financial awareness quotient – the planner in the initial days of the engagement also has to act as a coach for the clients, as the financial literacy quotient is usually very poor, and raising it is one of the major concerns for the financial planner. Some of the common investing mistakes need to be rectified, and the thought process of the client has to be modified or directed to bring about the change in the mindset, which will ultimately justify future actions. He has to teach the client to understand the fine print and between the lines. This helps the client avoid committing mistakes through impulsive decision-making.
• Realistic evaluations – the planner presents to the client the most realistic financial picture and demonstrates future projections calculated on rates for specific concern areas. Taking an average in general can backfire, as different industries have varying growth rates, and thus future predictions may be significantly off mark if there is a difference of even 1% or 2% over the long term. He considers investment returns conservatively, as over-optimism may dissuade the client from the investment process in troubled markets.

Charges:

The handholding (read: role of a guide) that the planner provides to help the client reach their financial goals is very hard to put in exact monetary terms on all occasions, and the best evaluators are those who have made a financial mess and have been resurrected by a planner. The awareness created by a planner, if communicated correctly to family members by the client, will prevent future mistakes. The charges of a planner, if calculated, put in proper monetary terms, can be manifold from what his actual fees are, as he makes the client follow the “Prevention is better than cure” as curing incurs both loss of income and cost of treatment.

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