Two communities know the benefits of approaching a SEBI-registered fee-only financial planner who charges a flat rate (not a percentage of your assets): freefincal readers and members of the FB group Asan Ideas for Wealth. More than 1000 freefincal readers are working with the advisors on the site’s curated list.
However, even in these communities, many members ask questions like, “My salary is low. Should I work with a fee-only advisor?” or “At what salary level is it right to work with a fee-only advisor?”
Why do people ask these questions even though it is clear to them and others who have seen them ask other questions in the forum that they need help? The answer is the fee. They think the fee is too much.
For a person making Rs. 25K a month, an initial fee of Rs. 10-15K (half of that for subsequent annual reviews) will seem too much. So the person then has two choices.
DIY or save up a few thousand every few months, accumulate the 15K fee and then work with an advisor. Either way, the most important thing is to avoid portfolio clutter.
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DIY is easy if you start on a clean slate. If you read for a few weeks, you would realise that goal-based investing and asset allocation are the keys. For a long term goal, all you need is 50% equity (simple Nifty/Sensex index fund) will do and 50% fixed income (EPF/PPF are enough for a start). Here are some free resources to help you get started: Free ebook: Re-assemble Step-by-step money management basics and How secure is your financial life? A Self-Evaluation Checklist.
The problem is reality is quite different. DIYs clutter up their portfolio without a clear strategy. Driven by FOMO and poor recommendations, they buy products from different asset classes, and soon it is a big heap of mess which only an advisor can unravel. So if you are not in a big hurry to buy products without thinking through, DIY will certainly work at all salary levels, from retail to high net worth individuals.
On the other hand, if you take the time to understand what kind of investor you are, evaluate your confidence and conviction levels, and appreciate that you cannot buy products without guidance, you would recognise the value of professional advice.
Once you do that, the fee would not look as steep as earlier. You could then accumulate the fee for a few months and meet the advisor. If you wish to become independent, then you make this clear upfront. Some advisors are also happy to teach you how to DIY.
In summary, “At what salary level should I hire a fee-only financial planner?” is the wrong question. The right question is, “Am I capable of DIY investing, or do I need guidance? Once you answer that satisfactorily, you can move on to the next step in attaining your future goals.