Reader Story: Are you sure you can be a DIY investor?

Published: March 29, 2016 at 8:20 am

Last Updated on

This is a guest post by Butun Mohapatra. When he posted his experience with a SEBI registered fee-only financial planner at FB group, Asan Ideas for Wealth, Vivek Vishwanathan suggest that it be published here. Butun immediately agreed and turned in a draft in just a few hours!

Let us find out what Butun wants us introspect if we have what it takes to DIY and why it is important to seek counsel from a SEBI registered fee-only financial planner. The text in brown is mine.


Do It Yourself investors now have unlimited access to information through live commentary/data on markets, instruments and new ideas. In addition, sites like provide them DIY tools that make their life even easier and economical. But, does that necessarily make DIY investment a success story for everyone?

The other side of the coin is investment advisory, which has been there since time immemorial. Is this profession going extinct/useless with many investors going DIY? When would you need an advisor even if you were DIY?

These are questions that need to be answered and a generic overarching answer will not suffice. A self-evaluation of (skills, bandwidth and performance) is a must for one to understand whether to go solo or will need help.

 Let us first understand the skills required to go DIY 

  • Reasonable degree of proficiency in finance and related concepts (Asset classes, products, discounting, inflation and goal planning, impact of interest rate on goals & bond yields, taxation, PE, EPS, NAV, risk, diversification etc.)
  • You need to be comfortable with dealing with numbers, just not concepts.
  • Staying updated with developments at a macro and micro level. Only in theory (or if you are Warrant Buffet), you can buy an asset and wake up wealthy after several years. In reality, you need watch over your shoulder frequently.
  • You should be technologically or process wise well versed. You should know how to manage folios, log-ins, DIY excel tools and off course how to Google for information and answers.
  • Most of all, you need to separate emotion from intelligence. You must have self-discipline and control.
  • Finally, a regular evaluation to see if you are in the right track is the key to success.
  • All of this obviously means that you need bit of time commitment. 

Why would DIY be more successful than expert advisory?

  • Because you know yourself (hopefully) better than anyone else.
  • You can take calls and sit on it if you have conviction.
  • You can be flexible to change, admit and learn from mistakes.
  • There are intermediaries who do not add any value and you will save on that cost which can compound to a tidy little sum.
  • Investment is super exciting. Why not have bit of fun while making money? 

But it is important to periodically take stock of what you are doing (even if it is exciting) and ensure that you are on the right path. If you are not, then you need an independent advisor. 

What are the signs that you need an advisor?

  • You are struggling to understand concepts and not able to identify with the developments in the market place
  • You are investing as much as you can (according to you) but still falling short of expectation when you review
  • You are not able to commit bandwidth for assessment, re-planning or any other related activity
  • You are doing well but now need an independent set of eyes to reconfirm your investments, asset diversification and alignment vis-à-vis stated goals.


In the market place, we primarily have two different sets of investment advisory services.

  1. Fee-only advisory – no commissions, only fees.
  2. Commission plus fee based Advisory*

* SEBI has made it clear enough that (a) individuals cannot earn commissions and provide investment advice; (b) mutual fund distributors cannot provide financial planning advice; (c) firms which have ‘separate’ (often on paper) wing for distribution should make direct mutual fund option clear to clients (fiduciary responsibility). Therefore, wrt individual advisors, option 2 is illegal and hence struck off. It is unfortunate that this group continues to operate blatantly disregarding SEBI mandates.

Historically commission based advisory has been the par game as there is a perception that Indians do not want to pay for advisory. However, commission based advisory in reality could be more expensive, though it stayed hidden from investors until Direct Mutual Funds were introduced and it  was made mandatory to disclose ULIP costs. It is now also mandatory to disclose mutual fund commissions.

I prefer to use fee-only advisor for the following reasons.

  • Biases – I do not want to doubt the intention of my advisor when he recommends a product
  • I need to clearly understand what I am paying, so that I can evaluate if the service is worth the cost or not.

 Now I would like to write from my experience of DIY investor and why I eventually chose to hire a fee-only advisor to manage my finance.

 My experience of being a DIY investor:

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To start with, I thought I was a perfect fit as a DIY investor. I satisfied all the requirements, at least most of it.

I am an engineer and masters in finance by education. I work in a bank. So, financial concepts and dealing with numbers come easily to me.

I started reading outlook money (those days that was the PF magazine for many) in early 2000. I used to subscribe to about 5 magazines and religiously follow all developments in this space. So, I always stayed updated and tuned to realities of personal finance.

I started my first SIP in 2004 for ELSS in the first year of my post-MBA job, much before it was popular and recommended. I have opened the online MF account with HDFC both for my wife and me about 9 years back. I was one of the first few to invest in Quantum Mutual Fund online as they were the first direct to customer MF house. So I am well versed with the process and technology.

So, I had the hard skills, knew the tools and techniques, I could have been a success story of DIY.

But, cut to 2015, I sat down to understand where I stand.

The result of my own assessment was disastrous; I was nowhere close to where I should be and wanted to be. That is when I decided that I may be knowledgeable but am surely grossly ignorant as far as personal finance is concerned.

What has gone wrong? I was knowledgeable but ignorant.

  1. I do not have discipline. I have disrupted the accumulation and compounding to meet the needs of some family functions, emergencies and other expenditure.
  2. I procrastinate. I just did not go out of some bad investments because I have to spend 1 hour doing some paperwork. And Only I knew about this so there was no pressure to expedite.
  3. I was always under the illusion that I could save more tomorrow and not setting aside enough now.
  4. I have reviewed what I did but as usual used my own bias to justify my decisions.
  5. As I lead a fairly conservative lifestyle by my earning standards, I was under the impression that what I am doing is best. I was in my own cocoon.

Then, I referred to Pattu’s list of advisors (Fee Only) and retained one of them. It is INR 9k per annum of planning and advisory for first year and a much lower amount for subsequent years. That is a meager amount compared to the value one gets. Literally merger compared to what others charge (in addition to suggesting regular plans!).

What is the value?

  1. You have someone who will understand your goals independently and come up with a plan. Now you can use all your intellectual horsepower to contest and contextualize, but at least you have someone to talk to and vet your requirement
  2. You get clarity on tools and instruments. As these are fee-only, you get advice, which are not biased.
  3. You get disciplined because you are being watched.
  4. If you get a good advisor, you have a sounding board. e.g. Can I do NPS or SSY? You get a viewpoint apart from Pattu or Subra’s blog that is now more contextualized for you.
  5. You get a second set of eyes into your finance and will probably let you know harsh realities, basically a maker-checker will remove all superiority bias that all of us have.
  6. You get simple solutions to your problems. E.g. I had an expensive ULIP and I was advised to drop it. I just did not know how to talk my RM and get this surrendered quickly. I was asked by my advisor to take a print out of surrender form, fill it and send it to the company directly. I did that and saved bit of something I cannot handle efficiently. Believe me, if I was doing it on my own, I would be still paying 8% of fund allocation fee.

As per me, I think I am now slowly getting back to track but the lost years cannot be made up easily and much work is required. But then better be late than never is an excellent idea here. I think I am having best of both worlds. I get the excitement of DIY where as I have someone watching over my shoulder so that I do not get over-excited and forget the destination.

Now, this is not a recommendation of going for an advisor.

You could be much smarter, disciplined and have more self-control than me – you could be knowledgeable and NOT ignorant.

But, if you do not realize where you are going then hire one. At least, do a quick review of your financial health and see if you are on track with your financial goals, given your experience, earning capacity and fast approaching milestones.


Please join me in thanking Butan for an insightful post. When it comes to money management, there are only two choices: DIY or pay for professional, but conflict of interest-free advice from SEBI registered fee-only financial planner.

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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 two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
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  1. Mr. Mohapatra, you have written a good memoir with such candidness that is praise worthy. With your engineering and finance background and the fact that you are one in the very vertical of finance and yet wanted to have a fee-only planner opens someone’s eyes and makes him introspect. The importance of getting audited by a third eye in spite of one own’s grip on the subject is an interesting observation. How do I get confidence that I am on right track if I would not face a grill in front of an auditor ? The only question I have is, did you walk into a planner’s office with your papers or did you conduct this self-audit remotely from your own premises ? Which one you find more comfortable when being audited ?

    1. Anish, thanks for your kind remarks. I initially did self audit and noted several lapses in judgment and application of theory. Then I decided to hand over the planning to someone else. I was just not doing it right. Thanks Butun

  2. It is not just all advisors are bad. As there are bad elements in all professions there are some bad elements in this field also. It is our duty to select a good one.

    If one decides to go with a advisor it is better to invest small amounts rather than big amounts and see how it performs and then go after him.

    1. Jai, the idea of this article is to encourage self assessment if one wants to go DIY. Selection of help is step 2 but do you need help or not is left to yourself.

  3. Very good article , Mr. Mohapatra. I am a CA and I still use the services of a Fee only Advisory. Of course I study carefully articles in Money control, Value Research and Freefincal. But one has to be lucky to get a good a good resourceful, energetic and committed guy ( the firm may be top-class, but the individual attached to you may be a dud !!!) to keep monitoring your investment , keep chasing you for redemptions and re-investments, keep informing you of all dividend announcements and new opportunities and yet not get angry , frustrated with you indifference ( sometimes) , delays and changes that you make against his advice. Well I have guy who is outstanding-I don’t even care , whether someone else is better-he may not be able to articulate or write a blog or give a lecture, but, he knows his job and he is a patient chaser to get things done.

    1. Thanks Ravindran. Good to know that you have availed service of fee only expert advisor. Pattu can look to expand the list on freefincal if the advisor meets all criteria of legality and his requirements so that others can get his service as well.

  4. The article is an eye opener …! Everyone needs to take a hard look and decide before advantages of time is lost …!! Thanks a lot …!!!

  5. Wow!!!!! What an article and honestly written…what i was looking for!!! You know sir there are millions of people who are doing this what you have did in past but if i ask a simple que to an layman investor why do you want to do rd / sip or anything he / she no answer…but all are not like you humble…EGO is the first thing you have to battle with….investor’s emotions is his biggest enemy.

    1. Thanks Hunny for your kind words. I agree with you that if we stay emotionally attached with our investment and possessive about our decisions then planning goes for a toss. Regards Butun

  6. Excellent article Butun. My personal experience has been that handling decisions around lumpsums which are > 10% of your total portfolio gets your conviction shaking. I am still DIY but contemplating an expert review. Thanks for the post.

  7. How safe is it to handover my finance part to an advisor. Is there some code that he won’t write or share with others.
    Looks many of us are DIY but needs to evalute if we are doing right. Now i also will think about it or evaluate.

    1. Quite safe if they are SEBI registered (fee-only) advisors. There is an undertaking signed if I am not wrong, but you can always insist that they sign one!

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