What a Financial Planner can do more than a Financial Calculator?
- 4 things only your Financial Planner can do for you!
This is the age of technology. You can get whatever you want from the place wherever you are. Everything is available in your finger tips. Days are gone when you stand in a long queue to Deposit/Withdraw your cash from your bank account. ATM and Online banking have changed everything and now you can transfer money anywhere within minutes without even stepping out of your home.
In the process of financial planning, I have met many customers. They are from different back grounds and different age groups. They have different type of knowledge with respect to financial planning. One of my client, (how is tech savvy too..) once asked me a question (which may be the root cause for this article). His question is “Why I need a Financial Planner when I can find so many Financial Calculators online?”. He also told me that “Those financial calculators ask details like Age and other things which include my goals also and it tells me how much I need to save every month to achieve those goals. This is what you are also doing typically.” Thinking a step ahead, he told – “Financial calculators are free and you are asking me to pay for it!”
Why you need a financial Planner?
I have discussed few things with him to clarify his doubt and then he understood the need for a Financial Planner. Many of us may think like him and hesitate to take help of a Financial Planner/Advisor. As he was my client for a long time and as he considers me as a friend rather than his Financial Planner he asked me this question and gets clarified. But everyone is not so comfortable to ask “Why I need a Financial Planner?” to their Financial Planner/Advisor.
Budgeting..
Budgeting is an art rather than a science. Your Financial Planner can do budgeting which the Financial Calculator cannot.
What Financial Calculator does?
Financial Calculator asks you to enter How much you can save every month? Or Which part of salary/monthly income you are going to save? Or after entering your goals, it will tell you, for achieving these goals after X years, you need to save Y rupees every month. Remember, it will never say “how you are going save that amount?” which is an important work of your Financial Planner.
What your Financial Planner do?
To be more elaborate, your Financial Planner can find who much you can save for every month? But for the Financial Calculator, it’s just an input given by you. You may be able to save say Rs. 15000 per month. But if you didn’t do budgeting, you may have Rs.10000 for investment and this is what you will enter in the Financial Calculator. This Rs. 5000 will make a huge difference for the time taken to achieve your financial goal.
Risk Management..
Risk Management is an integral part of Financial Planning which you may not have in any Financial Calculator.
What Financial Calculator does?
There is no provision for risk management in a financial calculator. Even if it is available, it will ask you to enter your monthly/annual income and calculate the amount of insurance you need.
What your Financial Planner do?
Your Financial Planner knows that Risk Management is not only taking an Insurance policy. Risk Management is how you manage the risk? He will help you to manage the risk.
Which means, there is risk in everything. For example, investing in Share market is a risk. But to achieve our financial goals, we need to manage the risk. Your Financial Planner can tell you how to do it.
Planning your Taxes..
If you use a financial calculator, it will tell you the amount you should invest and the investment rate at which you have to invest it. You will think that, if you invest that amount in that rate you will achieve that goal. But you have missed out something you need to pay to our government – Tax!
Your Financial Planner can tell you the tax effective ways of investments. So you will achieve your goals in a more accurate way.
Where to..
Once you know how much you should invest. The question to be asked is “Where should I invest this amount?”
What Financial Calculator does?
The financial calculator tells you that, if you invest at the rate of say 8%, you will achieve this goal. But it cannot tell you where you need to invest to get the return of 8%. There are some financial calculators in financial institution’s website (i.e., in Banks website, Mutual funds website, Insurance companies website, etc.,) where once your calculation part is over, it will give the list of products in which you have to invest to achieve that goal. The problem is it may not be a suitable product for you. It may be the best product available with them; it doesn’t mean it is suitable product for you.
What your Financial Planner do?
A Financial Planner analyse your financial position and risk taking capacity and then suggest you a product to achieve your goal.
Here I have listed only few things which a Financial Planner can do for you. In reality there are many more things he can do. If you are really interested in achieving your financial goals with the help of a Financial Planner, you can take advantage of our 30 min FREE financial consultation by clicking the button below.