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Why You Need A Financial Guardian For Your Finances... - Outside View by PersonalFN
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Why You Need A Financial Guardian For Your Finances...
Jan 16, 2017

Before we delve deeper into the topic, let us define a financial guardian...

An accredited Financial Guardian is someone who uses the financial planning process and instruments to help you figure out how to accomplish your life goals. S/he not only takes into consideration your financial goals, needs, risk appetite, and exercises such as budgeting, investments, tax planning, but also recommends financial solutions with your best interest in mind every time. This approach sets a Guardian apart from other financial advisors, who may be trained to focus on a particular area of your finances.

A Guardian who stands for ethics, integrity and putting your interest first, at all times.

An individual who does not follow this approach is not a Financial Guardian, merely a product distributor.

One may say, "But why can't I do my own Financial Planning instead of approaching a Guardian?"

Of course, you could! Actually, there are quite a few personal finance websites, magazines, and self-help books educating countless investors in the art of money management. However, here are some questions you need to answer before deciding whether you need a Financial Guardian or not:

  1. Do you follow a strict budget? - Most individuals tend to spend before they save. Are you one of them? The mantra to follow is: Income - Savings = Expenses. But if you are honest with yourself, you'll agree that there is hardly any money left to save at the end of the month. In fact the money seems insufficient to even meet your monthly expenses.

  2. Are you saving for your future? - Probably the answer is a quick "yes". In fact statistics show that Indians are far better at saving their money vis-a-vis other developed countries. If you are like most individuals, savings is what is left after meeting your expenses, put aside either in a fixed deposit scheme or gold or an insurance policy which were suggested by your friendly neighbour (who happens to be an insurance agent). Capital protection and guaranteed returns rank higher as parameters that you should astutely consider before you invest your hard earned money, don't you think? But take a moment here and seriously consider if the amount that you are saving would help you achieve your financial goals-educational expenses of your children, marriage expense when they grow up, building a retirement corpus that lasts your lifetime, etc. If you don't know the answer, dial HELP immediately.

  3. Do you believe that Insurance is an investment product? - If the answer is "yes", then you need to seriously consider approaching a financial guardian. Insurance is a financial instrument meant to protect against risks. It is not an investment product as some may have you believe.

  4. Do you know how to choose a financial instrument? - There are a number of financial instruments available today in India. And they can be complex, confusing, and intimidating. What is your approach for choosing a particular financial instrument? Do you rely on magazines, periodicals, television shows, and well-meaning friends and neighbours to make a decision? If "yes", then think again! It is high time to get your portfolio reviewed.

  5. Do you have a plan for the falling markets? - Planning for the bull phase is easy and an ideal situation that we all like to be in. But, life isn't all sunshine. There will be days when the stock market will crash (remember the 2008 crash?) and erode a huge chunk of your hard earned money. Are you prepared for it? What's your PLAN?

  6. Do you look beyond real estate, gold and fixed deposits? - Do you still consider that the only way to build wealth is through real estate, gold savings, and fixed deposits? Have you invested a major chunk of your finances in these three instruments? If "yes" then you need to consult a Guardian, NOW!

  7. Do you have a succession plan in place? - Do you have a Will? Or do you think this job is best left till your hair turns grey? Or are you the parents of special needs child? Have you written down a Trust Deed? If "no" then visit a Guardian at the earliest. Note, if you die "intestate" (i.e. without a Will) the prevailing "law of the land" will apply and your money will get distributed in the manner that you may not have wished for.

The list can go on.

So hope you recognise the need for a financial guardian who can hand hold you professionally and prudently in the journey of wealth creation. Irrespective of where you stand in your finances, it is a wise decision to seek a second opinion.

You will be able to evaluate and choose a Financial Guardian here.

All the Guardians listed on the www.certifiedfinancialguardian.com have gone through a program emphasising not only on the different areas of personal finance but also on the importance and essence of developing a financial planning advisory based on the principles of ethics and integrity.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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