1. Should a DIY (Do-It-Yourself) investor engage with a Fee-Only Financial (Advice-Only) Planner?

  • If you are not able to correctly answer all the questions in this quiz, then you are likely to benefit from engaging with a competent Fee-Only (Advice-Only) Financial Planner
    • While I have answered many of those quiz questions in various articles, if you have dedicated less than 10,000 man-hours (i.e. 5 man-years) to studying investing & personal finance, then it is not possible to correctly answer all the questions in that quiz
  • If you are able to correctly answer all the questions in that quiz, then you are in a good position to decide for yourself whether to engage with a competent Fee-Only (Advice-Only) Financial Planner. There is a high probability that you will benefit from such an engagement (there are aspects that you may not have thought through, for example how do you mitigate 'sequence of return risk' during retirement?). But there is also a tiny probability that you might not gain anything from such an engagement.¬† ¬†
  • The suggestions above deal with an initial engagement of one-year. They do not deal with the more subjective question of whether or not you will gain from continuing the engagement beyond one-year

 

2. Should I engage with a Fee-Only (Advice-Only) Financial Planner instead of relying on a robo-adviser?

  • The most important question in asset allocation is whether you are taking too much of risk. This is a complex question. Hence, I have not yet come across a robo-adviser (in India / the US) that uses the most important variables to determine asset allocation for a particular couple
  • Further, there are many aspects that a robo-adviser does not cover. For example, it does not tell you to minimize bad investments, in the flavor-of-the-decade, such as crypto-currencies, structured products, peer-to-peer lending and most angel investment opportunities

 

3. Should I engage with a Fee-Only (Advice-Only) Financial Planner who is in the same city?

  • There are only 30+ Advice-Only Financial Planners in India. And most of them conduct almost all their work over audio / video calls and email i.e. they rarely meet clients face-to-face. So being in the same city is not relevant¬†
  • Further, if you are in the top 1% of people in terms of competence in personal finance and investing, then limiting your search to the advisers in your city may make it difficult to find an adviser who is more competent than you are and is in the top 0.1% (and more so if you are in the top 0.1% and are looking for someone in the top 0.01% or definitely if you are in the top 0.01% and are looking for someone in the top 0.001%)

 

4. Are there any objective factors to indicate that you as an adviser may be more competent than I am?

  • I have been as an investor for 13 years including a decade as a Partner and one of the five members of the founding team at a top 5-10 independent Indian Private Equity & Venture Capital fund
  • Further, I have a two-year full-time (i.e. the flagship course) MBA from Indian Institute of Management Bangalore (IIMB) and I have been a practitioner / student of finance and investing for more than three decades
  • Finally, all my working hours are focused on personal finance and investing. So, I can focus on aspects that laypeople don't focus on e.g. how do you mitigate 'sequence of return risk' during retirement?

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