We recently asked clients of SEBI registered fee-only advisors on our curated list and fee-only India to fill out a feedback form. Articles related to this survey: A fee-only Advisor’s Letter to his clients and Client Survey: The most important factor in choosing a fee-only advisor.
One of the questions was: “What were your expectations before approaching the advisor? Choose as many as relevant.”
The options and the percentage polled (totals responses: 967) are:
- I wanted to maximize my portfolio return (35.2%)
- I wanted to know if I can achieve my financial goals (72.1%)
- I wanted an easy-to-understand investment plan (60.6%)
- I wanted hand-holding or guidance every step of the way (32.1%)
- I only sought validation of my approach, after which I can continue to DIY (20.4%)
- I wanted to learn money management and was looking for a teacher (29%)
- I wanted transaction assistance (2.9%)
It is a good sign that most clients want to know if they can achieve their financial goals and an easy-to-understand investment plan (to achieve them). It is fantastic that only 3% wanted transaction assistance. This means most clients are savvy enough to implement recommendations on their own. Even more important, most clients can function independently. This is the hallmark of advisors and clients associated with freefincal and fee-only India.
About 30% want to be DIY investors, and about 20% are DIY investors looking for validation. Another 31% are non-DIY investors who want to be guided by an advisor.
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What is a bit worrying, however, is 35% of respondents want to maximize portfolio returns by working with an advisor. Is this possible? Can a fee-only advisor help you get better portfolio returns?
Can a fee-only advisor help you achieve your goals? They can certainly put you on the right path and course correct as necessary when (if) you go for reviews. So if a better chance of achieving your financial goals is equivalent to a better portfolio return, then yes, you would be happy working with a fee-only advisor.
You are barking up the wrong tree if you want a higher XIRR or annualised return just because you have paid a fee-only advisor. Some ask, “What is the point of paying an advisor?”
The point of paying an advisor is to (1) declutter your current mindset about investing and your portfolio and (2) realign current (and future) investments to your goals. If you do not value that, stay away from these advisors.
“Will these advisors guarantee results?”. Of course not! No professional would! The same argument goes for lawyers, doctors etc.
“Can a fee-only advisor do better with my portfolio than if I DIYed?” If you are confident enough about your DIY skills to ask this question, you are better off DIYing.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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