SURESH SADAGOPAN, Economic Times, 28/7/2011
Let me start with a question: What would you say if you are offered a car for Rs4 lakh? You would obviously want to know which car it is, if it is new or used, what its features are, etc, and then you would use your judgement to conclude if the car is indeed worth the buy.
What you have done just now is to evaluate the value embedded in the offer and then find out if the asking price is worth the value offered. If it is, you will buy the car. Else, you will not. In fact, this is precisely what we do before taking any decision. If you get a novel at Rs99, it is seen as good value and you would buy it.
If the same novel costs Rs750, you probably won’t buy it. A movie ticket in a multiplex at Rs100 is seen as a value proposition, whereas you may not want to pay the same amount for a ticket in your neighbourhood theatre.
McDonald’s is doing brisk business with its burgers priced at Rs25, which is seen as a value-for-money offering. Similarly, the vada pav, which is also a burger, sold for Rs7 at roadside stalls and for Rs10 at Jumbo king are also a value-for-money proposition for many. Hence, they all have a loyal clientele.
The thing to understand from this is the value proposition. For anyone, the cost alone is never the main or the only criteria. The value proposition comes from the entire set of benefits offered, not just the price. Now, determining that is easy if there is a frame of reference. Okra at Rs30 a kilogram today is cheap, because it was selling for anywhere between Rs40 and Rs60 a kilogram for several months. A multiplex ticket at Rs100 is seen as pretty good value, as it normally costs between Rs175 and Rs250. Get that?
Determining the value of daily-use or popular items is easy, but how does one do it when it comes to financial planning, which is a new area? There is nothing to benchmark it with. So, how does one figure what is the right fee to pay? Look at what you want. You probably want to hire a financial planner to get a blueprint for your life ahead and want to know how to achieve your goals. For creating a tailor made financial plan, our experience is that it takes 25-30 man hours in all.
Taking an average of Rs500 per hour for hiring the services of a qualified financial planner like one who has a CFP(CM) certificate, the fee would come to Rs12,500 to Rs15,000. But the per-hour rate can be higher or lower depending on the process adopted, the experience and expertise of the planner, etc. That’s how planners arrive at their fee.
Now, is that value for money? For that you need to find out what benefits you would derive by engaging them. The financial plan will give you clarity, direction and pathway to achieve your goals. That is important as you will know where you are, where you need to go and how to get there. The financial planner will also suggest if past investments and insurances are good to keep or are damaged goods that need to be replaced. A good financial planner will also help you a great deal in cash management – matching the right instrument for the end-use and tenure.
We have found that the amount of extra money we could make for our clients by judicious investments would be more than enough to pay our fees! Financial planners will ensure that you don’t make a blunder while making allocation to different asset classes or in choosing products. You will also not be sweet-talked into some card-castle-of-a-product, which makes sense only to the company and their agent.
There are various advantages you can derive from using the services of a financial planner. A financial planner will give you a clear financial blueprint, which will ensure peace of mind as you have an expert to guide you on finances all through the year. The planner would also stanch leakages by stopping/reallocating resources to appropriate products, improving returns and relevance.
Before engaging a financial planner, find out about the various services you can get. Find out how much money the planner can save/make for you. Find out how comprehensive the plan is – for the financial plans of different planners could be different. Do a quick check about the integrity and dependability of the planner. Ask for references if you feel the need for it. Fees differ based on the experience and expertise of the planner, reputation, their processes, services offered, people strength (is it a single person or is it a team?), etc.
After understanding the value offered, you can decide who charges the appropriate fee and whose offering is good for you.
Investment Bankers in Chennai, Stock Brokers in Chennai, Stock Advisors Chennai, VRIDHI Stock Tips, VRIDHI Stock Market Advisors Chennai, Portfolio Managers in Chennai, IPO Advisors Chennai, Portfolio Management Services Chennai, Portfolio Construction Service Chennai, Stock Tips on SMS MarketFastFood, E Commodities Advisors Chennai, Mutual Fund Agents Chennai, Mutual Fund Advisor Chennai, Certified Financial Planner Chennai, Certified Personal Financial Planner Chennai, Stock Market Speakers Chennai, Seminars for Investors Chennai, Stock Brokers T Nagar, Fee Based Financial Planners Chennai, Market Fast Food, Customization of Equity Portfolio, Equity Market Advisors Chennai, Financial Planning Workshops Chennai, Stock Market Trading Workshops Chennai, Financial Planning Presentations Chennai, Seminars of Stock Market, Seminars on Financial Planning, Training in Portfolio Management