Though the concept is alien in India, the practice is catching up globally.
Just as surgeons can’t operate on themselves, financial advisors would do well to engage their peers to ‘cure’ their finances.
One might think what’s the point hiring an outsider when you know your job well? Here are some reasons why it makes sense to outsource the task of your managing your portfolio to someone else.
Financial advisors go out of their way to ensure that they meet their client expectations but can they put the same effort in managing their own finances? Advisors may be conscious that they need to revisit their portfolio but they may lack time and resources to do justice to their finances. This is where the need of another advisor comes handy. “Financial planners tend to ignore their own finances. They may not do the kind of due diligence while investing their own money as they do while managing others money. Spending time on their own investments takes a back seat due to inertia and procrastination,” points out Suresh Nair of All Kerala IFA Association (AKIFAA).
Hiring an outsider ensures that the plan is free of personal biases, says Malhar Majumdar, a Kolkata based advisor. “Advisors may not act objectively while managing their own money. Their biases will reflect in their finances. Like their clients advisors also have paucity of time to do justice to their finances.”
Outsourcing not only helps in smoother execution. Suresh Sadagopan of Ladder7 Financial Advisories seconds Malhar’s views, “The biggest advantage of hiring a financial advisor is that one gets a third party perspective on investments. The advice received is unbiased and objective. However, some advisors may not be comfortable revealing their income details to their peers which is the reason why many advisors manage wealth on their own.”
Vishal Dhawan of Plan Ahead Wealth Advisors says that hiring an outsider brings seriousness to the entire process, “Paid service creates a lot more accountability and credibility. When an advisor hires other financial planner they tend to take their goals seriously.”
Some advisors say that they can outsource just the execution job to an outsider. “Financial planners can create their own plans and ask someone else to implement their plans”, says Rajat Dhar of Cogent Affiliate Network.
Points to be considered while hiring a financial advisor
- Advisors should avoid giving the task of creating their financial plans to their employees.
- Advisors should try not to get too involved in the implementation of the plan as there may be ego clash with the advisor.
Though the concept is untested in India this practice is catching up internationally. But financial planners in India are also recognizing this need and are open to engaging their peers to manage their own wealth. “Though this practice is not much prevalent in India, advisors should definitely hire professionals to manage their own portfolios,” adds Rajat.
Even advisors who manage their own financial plan should get them reviewed by peers to ensure they are on the right track.
While advisors acknowledge the need to hire an outsider they say that not many advisors take it seriously in India. Hemant Rustagi of Wiseinvest Advisors says, “In India, many financial experts do not feel the need for financial planning for themselves.”
Would you consider hiring your peer to manage your finances? Let us know.
source: cafemutual.com