Not sure if you need a financial advisor? Try this simple test!

Published: March 30, 2021 at 11:30 am

When it comes to managing our money, there are several questions to ask. (1) Should I do it myself? Can I do it myself? Or outsource it to a professional? (2) If I wish to outsource, who should I contact, what should I expect, what questions should I ask them? For the last six-plus years, we have effectively answered the second set of questions. Here is a simple test to answer the first set of questions.

Hundreds of freefincal readers are working with our list of SEBI registered fee-only financial advisors. They get unbiased advice free from conflict of interest and do not pay a fee linked to their networth (this is a proxy for commissions and should be avoided). Check out feedback from clients. Also available as a video.

So the “who should I contact?” question has been effectively answered. As for what to expect and what questions to ask them, please refer to these articles: Looking for a fee-only financial planner? Here is a list of questions to ask before you sign up and seven ways a fee-only financial planner will NOT help you!

So now let discuss a simple test to find out if you need to hire a fee-only advisor. Think of your investment portfolio (SB acct, PPF, real estate, stocks, MFs, etc.) as a clothes cupboard or closet or wardrobe. How does it look?


Like this?

Untidy wardrobe to represent a disorganized investment portfolio
Untidy wardrobe to represent a disorganised investment portfolio

Or does it look like this?

Organized wardrobe to represent the investment portfolio of a organised DIY investor or investor working with a SEBI registered fee-only advisor
Organised wardrobe to represent the investment portfolio of an organised DIY investor or investor working with a SEBI registered fee-only advisor.

Or perhaps like this?

Empty wardrobe to represent the investment portfolio of a young earner
Empty wardrobe to represent the investment portfolio of a young earner

Anyone can tell you it is easy to go from an empty wardrobe to an organised wardrobe (will it stay that way is another matter!). Going from an untidy wardrobe to an organised one (and keeping it that way) is a lot harder.

Suppose your investment portfolio is practically empty (meaning you have just started earning and have not yet made any investment mistakes like saving tax!). In that case, you can happily become a DIY investor and do not need a financial advisor. That is, assuming you are willing to learn first and invest later!

If your investment portfolio is already organised, then you do not need an advisor either. It might surprise you, but many well-organised investors seek out a fee-only advisor for an unbiased second opinion.

If your investment portfolio is a mess, and assuming you want it set right, then can you clean it up yourself? Even if you can, do you have the time to do this? How soon can you make it organised? How much time can you spare for this? The answers to these questions will help you decide if you need the help of a financial advisor or not.

Ask this question (“do I need an advisor?” in a forum like the Facebook group Asan Ideas for Wealth, and you will see a few responses like, “financial planning is easy, it can be DIYed; there is no need for a financial advisor”.  Often the reason for this is, investors who went from empty to organised closets assume anyone can set up an organised closet often forgetting how untidy most closets are.

Sure, that is in principle true, but very investors can pull it off, and even fewer have the time to sit and holistically think about their finances.

The situation is quite similar to how SEO (search engine optimisation) works. A new website can create relevant and helpful content to get traffic from Google without professional help. An older site would large be a collection of mistakes. Often a professional or a paid tool is necessary to get rid of these mistakes.

So do have a good hard look at your investment wardrobe (with your partner, if applicable) and ask, is this organised? If yes, do I need a professional second opinion? If no, can we sort this out ourselves or do we need help?

If you want help, this is the place to start: List of Fee-only Financial Planners in India (SEBI RIAs)

Do share if you found this useful

Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 640 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 2525 investors and advisors are part of our exclusive Facebook Group! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 585 salaried employees, entrepreneurs and financial advisors are part of our exclusive Facebook Group! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group!   
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored three print books, You can be rich too with goal-based investing (CNBC TV18), Gamechanger, Chinchu Gets a Superpower! and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps