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Why This Paid-Versus-Free Financial Planning Di

This is what happens when you are enjoying your holiday and get a cold-call from a financial planner who first offers you a fee-based service, and then goes down to do anything for you for free.

This is with due regards to Dhanush and his team for their wonderful composition that I’ve twisted to suit what I want to tell you with respect to my view on this entire debate of “free versus paid” financial planning, and which one is better for you – the investor.

So here I go…

Yo boys
I am sing song
Soup song…
Flop song…

Why this paid versus free financial planning di…
Why this paid versus free financial planning di…
Rhythm correct
Why this paid versus free financial planning di…
Maintain please
Why this paid versus free … aa di.

Aa…free financial planning nice-a nice-a
Still the client pays a price-a
Planner’s focus is commission from selling
Client does all the crying-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Free financial planning costly costly
Client realizes it lately
Cost due to bad advice-a advice-a
That is what’s the price-a
Why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Paid financial planning nice-a nice-a
Planner gets a heavy price-a
Benefit not seen for years-a years-a
Client full on tears-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Bad advice remains-a remains-a
Client is bound in chains-a
Money is already gone-a gone-a
Advisor may turn out a con-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Paid or free is not the point-a
Accountability is what matters-a
Find advisor who’s good-a good-a
Or see your finances in tatters-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Good advisor is one who cares-a
Not for himself but you-a
Whether he charges or not doesn’t matter-a
What matters is his advice-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Check for his skill-a skill-a
Check for his past-a
Don’t fall for big promise-a promise-a
Such promises don’t last-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

It’s your money at stake-a stake-a
So be very aware-a
Don’t fall into trap-a trap-a
Choose advisor with care-a
Ho…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

Whah, wat a change over mama
Ok mama, now tune change-a
Uunu..aa..
Bad advisor-a
Bad advice-a
Eyes-a full-aa tear-a
Empty life-a
Money is gone-a
Life-a reverse gear-a
Do not blame-a
Do not cry-a
It is your choice-a
Haan…why this paid versus free financial planning di…
Why this paid versus free financial planning di…

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. Uttam Kumar Sen says:

    A professional financial planner speaks from heart…..nothing is free in this world…if it’s free then you pay indrectly more what you supposed to pay directly!!! Choice is yours…..

  2. Hahaha

    Hi Vishal, since I had also started this discussion a few months back on this topic (https://bit.ly/wikipaisa_free_vs_fee_poll) let me add my thoughts.

    The important issue in Free v/s Paid is about conflict of interest that can arise when advisor gives advice for free and earns from commissions.

    If you look at most problems in mis-selling and mis-buying of financial products, including the global financial crisis fueled by the sub-prime mess, you will find this conflict of interest as a root cause.

    Having said this, I understand that consumers in general and Indian consumers in particular are not used to paying for financial advice. This mentality has created a huge problem for many genuine financial planners who want to run a transparent, fee based practice, but are not getting enough acceptance from clients. Though there are some excellent examples of financial planners who have excelled and won clients’ trust and are commanding fees. But such examples are very few as of now. I see more people struggling to charge adequate fees and hence relying more on commissions.

    Of-course, paying fees is not guarantee for getting good advice. Free advice can be good and vice versa. But if financial advisor as a profession has to grow and mature, then a consumer paying fees for advice is much more transparent than the commission-based model which, I repeat, has an inherent conflict of interest.

    Regards,
    Deven

    • Thanks for your comment, Deven! Yes, a fee-based model is definitely the way forward for the financial planning profession. My only concern is against unscrupulous advisors adopting this model, taking upfront fee, and then leaving their clients in the lurch. So the most critical question within this entire argument is that – more than the debate surrounding ‘free-vs-paid’ financial planning and which one is better – what will make the planner more accountable to the client’s needs?

  3. Padmaja Madala says:

    Great work…thoroughly enjoyable….Superbly conveyed by lovely lyrics & composition.

  4. Kishore Senapati says:

    Congratulation for having some fun while giving useful advice! You see, you are becoming more creative!

  5. Why this kolaveri…. lol. Good one Vishalji.
    I am not against Financial planners, because there are few really good ones out there. But I feel that hiring a financial planner is not compulsory for everyone. People willing to spend some time to learn and willing to apply, can always take care of their finances. Simplicity can help us in staying away from complex products and advices. And I hardly believe that anyone is so busy that they cannot spend some time to plan their future. People who has a lot of money and can afford, it’s ok to go ahead with a good financial planner.
    To me, I like to keep it very simple. Goals, year at which it needs to be achieved, amount required. Select not more than 4 financial instruments – could be Gold, Equity, Mutual Funds, Flexible FDs, PPF etc. Stick with few good assets and keep monitoring.

  6. Vishal,
    Are u quitting the dull investment world for the glitz and glamour of show biz, by becoming a lyricist or song writer….
    Sure there is more bling there and I don’t blame you.
    Great song…..now just get some one to sing it to the tune and post it.
    Ramesh

    • No Ramesh, I would be a disaster in anything but the investment field! I wish the relevant message gets passed on to the financial advisors and investors. And when that happens, I will be happy to sing it to its tune. 🙂

  7. Very well explained about free and paid financial planning … Nice one author.

  8. Ravi Padmanabhan says:

    Your Chennai visit must have had an influence on this song i guess..

  9. If you do a basic reading in selective blogs, web sites, newspaper and financial magazines on financial planning and investments. With the help of excel or online calculators small investor can easily manage their investments. It is just the interest of individual to indulge in savings habit is more important. No need for paid financial planning.

    In my opinion, a small investor need to 1st have a term insurance of 240 month salary x 1.5., Medical insurance to cover family, Goals divided as long term and short term. Dont bother about the target amount for goals. Just mark your short term needed money and invest in debt like post office, debt funds, fixed deposits etc. and all long term money (more than 7 years away goals) invest in good equity mutual funds and gold in the ratio of 80:20 (or say 90:10) and keep investing monthly through SIP. Increase your savings and invest as much as you can with out bothering goals. Just do re-allocating the assets to balance asset allocation on a yearly basis.

    In long term with 15year or 20 year goals, the target amount is meaningless. It is difficult and may be meaning less to assume inflation for a 20year period. Just imagine, the petrol was 8Rs or so in late 80’s and 80Rs today.

    Paid financial planning are good only if there are genunine ones available at resonable cost. Thats rare to get.

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