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You are here: Home / Financial Planning / Why Fixed Fee Only Investment Advisor is better choice for you?

Why Fixed Fee Only Investment Advisor is better choice for you?

Last updated: August 28, 2019 | by Urmil Trivedi Leave a Comment

Before Fixed Fee Only Investment Advisor is best for you, one important question is why you need an investment advisor?

“Investment Advisor” very commonly used word in today’s financial and investment space. If someone is working as a product distributor or agent of mutual funds, insurance or so called wealth management firms, they called themselves as an “Investment Advisor”. This is the same like pharmacists who sold medicines called himself as “Doctor”. If someone tells you to take medicine directly from pharmacist without proper medical checkup, will you buy it? Most probably answer will be “No”.

Many times we take informal investment advise from friends, office colleagues, relatives, by watching business news channels etc. It’s same like your friend is taking medicine of hypertension and you started taking the same without understanding that you are not suffering from hypertension. You may think that this is a common sense; I will not take medicine without proper consultation to Doctor. So one question arises here is that if your friend is investing in product X then why you invest in same product X without having proper consultation with professional and/or without understanding pros & cons of product X?

There are various people who work as a middle man between you and investment product manufacture. The called as Distributor or Agent who sells products of some companies and they get commissions from the company. Directly or indirectly they give incidental investment advise which help them to sell their products. They have vested interest in product selling. Again here like pharmacist gives you medicine from XYZ Company only just because he gets higher compensation from manufacturer.

Fixed Fee Investment Advisor does not receive commissions or brokerages or incentive.

In this world nothing comes free of cost. You have to pay price either by way of commission or fee. The product you buy have hidden and added commission while you have a transparency in fee model. Everyone have family doctor than why not to have professional investment advisor for their family? Many time wrong product buying costs you more than a fee because it will not generate appropriate returns.  I have seen many time people bought wrong product without proper planning costs you in term of not getting appropriate returns, short fall in goal funding and many time loss of invested amount. People buy financial or investment or insurance product without proper planning, understating the requirement, current financial or market scenario, suitability and risk tolerance level will harm in long term.

Almost every investor gets into product selling trap. Here, you should pause for a while and think that have ever met with anyone who talks about your personal finance, life stages goals, financial crises, managing your expenses, etc? Here is the Fixed Fee Only Investment Advisor comes into picture. He is the one who works for you only. He does not get any compensation other than the Fee which you pay for financial planning, monitoring and review. There are different business models in Fee Only Investment Advisor.

Fixed Fee model is not based on how much assets you have or how much you’re earning. Advisor charges fixed fee for preparation of financial plan and help you to implement the plan along with timely monitoring. The Fee is fixed based on the work needed. According to me this model is ideal for any individual who need financial planning and consultation help. Fixed Fee Investment Advisor works with intension to help his client to achieve his financial goals and objective. He may charge renewal fee for review and monitor of financial plan which he created. This is truly unbiased and fiduciary fee model.

The Fixed Fee only Investment Advisor may have perfect choice for any individual because his business practice is not based on product level. He first analyse you current financial situation, life goals, objective and aspirations and based on this he will design your financial roadmap which helps you to have sound financial life. Ongoing service of Fixed Fee Only Investment Advisor helps you to have discipline and steady approach towards your financial journey, periodic review and monitoring helps you to stay on the right path.

Why people do not want to have professional investment advisor?

Many time people think that managing and maintaining finance is a easy and doable task. They feel they are experts in money matters. Some group of people thinks to have professional investment advisory costs much and they will not afford it. Sometimes people thinks investment advise is freely available online than why should I pay for it? There are some common hurdles which people thinks while having a professional investment advisor.

Fixed Fee Only Investment Advisory put your interest first. He will not have financial products or category biased. I’m saying your interest first means if you have a fund corpus in hand and you have loans outstanding than he will first guide you to pay your liability first just because his practice is not on a product centric.

I hope it will help you to evaluate the pros and cons of having professional investment advisory and get clarity on difference between Fixed Fee Only Investment Advisory or Commission based Distributor/Agent.

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Urmil Trivedi

Urmil Trivedi is a Chartered Wealth Manager (CWM®) , Chartered Financial Goal Planner (CFGP®), Advanced Financial Goal Planner® (AFGP®) by American Academy of Financial Management (AAFM ) ,Fee Only SEBI Registered Investment Advisor (RIA) and Founder of RICHESSE INFINITE WEALTH- Financial Planning and Investment Planning Firm. He is also designated as a FAAFM Fellow of the American Academy of Financial Management®. The purpose of this blog is to spready financial awareness and knowledge sharing only. Any knowledge sharing though this blog or comments or views are only meant for guidance and awareness. These should not considered as a Investment Advise or Legal Advise.

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