IMPORTANCE OF FINANCIAL

ADVISOR
 financial adviser
• A financial adviser is
a professional who
renders investment
advice and financial
planning services to
individuals and
businesses.
 Types of financial adviser

• fee-based -

• fee-only -
 Financial planning
• Goals
• Retirement
• Investing
• Designations
 The Importance of a Financial
Advisor

• Professional Experience

• Evaluating Investments

• Managing Investments
 Answer These Questions
• Have you utilized asset allocation effectively?
• Do you know enough about all the individual stocks,
bonds, mutual funds and money market funds to
choose your investments wisely?
• Is your investment portfolio diversified enough to
give you the best potential results?
• Do you have enough time to review your investments
periodically to determine if you should reallocate
your investments?
• Have you spoken with a tax advisor to determine if
you’re getting the most out of your investments?
• Are you taking advantage of the power of
compounding?
• In case of an emergency (loss of job or sudden
medical expense), do you have enough cash on hand
to pay your bills without having to cash out at a lower
price?
• Are you aware of the constantly changing tax laws
and how they can impact your investments?
• Have you considered taking advantage of dollar cost
averaging?*
• Are you able to take advantage of both taxable and
tax-exempt investments?
• Do you understand how economic factors such as
interest rates, unemployment, housing sales, inflation
and productivity impact the economy, the stock
market and your investments?
• Will you be prepared to pay for your children's
college education and your retirement?
• If you answered “no” to a few of these questions,
perhaps you should consider working closely with a
financial advisor to help you make the most informed
investment choices for your personal situation
 What Financial Advisers Do
• The Big Picture

• An Unemotional Assessment

• Allocate Resources

• Minimize Taxes

• Estate Planning
 In broad terms, adviser will cover
these areas

• Retirement accounts
Insurance including medical, life, disability, liability
• Educational goals for how many children at what
ages
• Taxes both personal and business if self employed or
own a business
• Other financial goals such as second home, buy a
business, retire early
 Summary of case
• Ramesh belongs to a middle class family
• Working with an electronic company as a sales
man from last 12 years, with the salary of
Rs.8000 – Rs.10000p.m
• Got a call from land lord to top up the deposit
of house from Rs.50000 to Rs.100000
• Bank balance Rs.10000
• Invested Rs.200000 in stock market on friends
advice Brijesh (in the year 2002)
Contd….
• PV of investment is Rs.20000
• On the other hand, Brijesh invested same
amount in the same year, now his PV of his
investment is Rs.250000
• Ramesh put money on friends advice but he
did not how to churn its portfolio
 Annualized 5 year return before
inflation
INVESTMENT WORST BEST AVG.

Equity -25% 65.75% 19.5%

3Year company 10% 13.50% 11.75%

deposit
Gold 4.90% 30% 16.5%

1Year Bank deposit 7% 10% 9%

• As a financial advisor we would
have invested the sum of Rs
200000 in the following way…
INVESTMENT AMOUNT (Amt. PV (Amt. in Rs.)
in Rs.)
Equity 146500
60000
Gold 60000 129000
3year company 50000 70000
Deposit
Bank Deposits 70000 83000(Returns
Rs.13000)
Bank Savings 30000 35500
(Liquid cash)
TOTAL 200000 394000
 Conclusion…..
• It is not necessary that only individual with
high investment can take help of financial
planners
• With the help of financial planner one can
increase its value of the investment over the
period of time to cope up with inflation and
unexpected expenses