what do the most successful athletes, world famous artists, CEOs of top companies and ultra rich people have in common?
If you guessed that they all employ personal coaches, then you are absolutely right. If you analyze their success, you will notice that the achiever had a coach that guided them every step of the way to attain manage, and maintain the success. But it takes two to tango - the coach can help only if the student is committed and dedicated to reach the goal.
For a long time, I was very confident (read smug) about my abilities manage my finances. I was already practising a frugal, LBYM lifestyle, was conscious about spending money on big ticket items and saving regularly. Then I met a finance wizard that showed me how much more there was to learn in this field and the scope for further fine tuning my strategies. That was a real aha! moment that turned my perception from "I don't need a Financial Advisor" to "I don't need a Financial Advisor".
I truly wish I'd met the wizard way earlier but I also believe it is never too late to begin anything. It is a cardinal mistake to waste time rueing the past rather than making the most of present. With the support and encouragement of my advisor, I started my own Deep Learning (with due apologies to the AI/ML purists) into the personal finance topic. It has been a fascinating journey which opened changed my perspective on many ideas including, money and retirement. I made a few discoveries that shaped my philosophy about money and its importance in life. In this process, I managed to define the LEADERS framework for managing personal finance. Through this blog, I wish to share the updates from my journey of personal financial management and also introduce you to the LEADERS framework. IF along the way you too decide to try out the framework, I would be more than happy to assist you in your journey.
Who the heck is a Financial Advisor?
A financial advisor is a professional who provides expert advice and guidance on managing finances.
Types of Financial Advisors
1. Advisors from Banking / Financial institutions reach out to offer you a one hour free session. They will gather basic data about you, input in a tool, come up with probability of success. There on, the discussion will focus on hiring them as a financial advisor and looking at what amount you can invest with them. This is categorized as "Assets Under Management". These financial advisors will charge a % (typically 1% - lower if the investments are very high). Amount charged is based on the invested amount and NOT on the outcome of investments
2. Advisors who run their own business send you an invite for a free lunch or dinner. There they give an overview of current market trends, taxes in the future and highlight the need to Invest in Annuities that will help prevent any losses when the market crashes, gives upside when the market goes up and an upfront bonus to sweeten the deal. They don't charge your any fees, but are compensated by the company whose complex financial products they sell.
3. Flat fee advisors who work on an hourly basis and have a fiduciary responsibility towards your interests. They don't push for assets under management OR buying any financial products
Whom would you hire and why? Would love to hear from you on your thoughts!
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