Expert advice

Aug 26, 2014,13.57 IST

Personal Finance websites v/s Financial Planners

Ramalingam K

Financial Planning is a process that involves much more than playing with numbers listed in the data sheet. This process requires a thorough understanding of what the client needs and aspires to, and how will he be able to fulfill the same. It also encompasses understanding the client’s mindset, along with having an idea of his background, regarding his monetary relations.

How are financial websites useful?
•    An advantage with finance websites is that these help in getting our fundamental concepts clear.
•    In addition, they also help get easy and quick access to data and rates.
•    They may act as chemists that provide much affordable online term policies or mutual fund portfolios along with their risk return trade-offs.
•    However, they can never play the role of the doctor, who prescribes the medication. A thing to remember here is that self-medication can often prove to beharmful.

In what ways is a financial planner more beneficial than a website?
Get an idea:
Budget preparation and planning enables the customers to get an idea about where their hard-earned money is used. In addition, this also has the ability to ascertain certain very strange questions that may be difficult to answer by one’s own family members.
This plan also assists in sectioning the client’s needs and desires, thereby setting the priorities accordingly. In some of the cases, one may even cut-short his lavish spending that can in-turn, divert to a more reasonable expenditure. However, for this to happen, the entire family needs to sit down and discuss their fiscal matters with a capable financial professional.

The mindset of a majority of people, dealing in finance related products, somehow justifies pushing of their products to the clients, who are ignorant of the various pros and cons of the product they are bulldozed with. A financial planner assists their customers analyzee very product they purchase,and whether it will be wise to continue with the same or not.

Very often, we may find people adhere to life insurance policies. These policies cover those clients who assure for a small sum,and yield returns that cannot even match inflationary risks.

One needs to understand the policies keeping in mind the client’s future requirements, and advice to make it paid up or surrender based on the policy’s conditions. Making such decisions often tend to free up the excess investment for the client, in case some earlier commitmentstie up his pocket spending.

What can a real financial planner do, but a website cannot?
Theory v/s In-Practice:
Many of the clients believe equity oriented investments as a risky option. Moreover, they bent on to instruments with only a fixed income investment. They consider guarantee as the last approach and forbid volatility in returns. They also regard the time horizon of the concerned goal as irrelevant, and asset allocation senseless.

Such clients need regular updating of concepts that no personal finance website can ever provide. Learning the theory and implanting the same into one’s practice are two very different aspects. These cannot schedule or mechanize, as each relationship even a financial one, needs some kind of human touch to develop and nurture properly.

Unique financial opinions:
The personal finance websites, which analyze mutual funds and policies, are the important tools for performing a comparison and data crunching. However, applying its true implications in a person’s financial life requires an in-depth analysis along with a lot of introspection.

Two different individuals, as two separate entities, cannot have a common financial plan. This is because of their vastly distinct financial position, wants, priorities and goals in life. What may be a common thing in them is holding similar employment positions in an organization. Beyond that, two people have very distinctive personal as well as financial lives.

Therefore, following the same financial opinion, as provided by a personal finance website, can prove to undermine in many situations.

Review – better with an in-person financial planner:
Reviewing of the financial plans is also required to comprehend the investments’progress towards achieving your goals. One also needs the review, if you require doing some complex changes for addressing an unexpectedly arisen issue. Such situations again call for a humanitarian intervention, as just a customer care query or an email may not suffice for the same.

Concluding the discussion, I would say that each of the financial websites and planners have their own set of benefits as well as pitfalls.Therefore, it will be much of an advantageif both of these coexist, with each of their roles clearly presented before the client.

The author is Ramalingam K, CFP CM is the Chief Financial Planner at, a leading Financial Planning and Wealth Management company.

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