How rich should I be to hire a financial advisor?
I am a 26 year old IT employee with a salary of 35,000 per month. I want to start investing in mutual funds but I know nothing about it. I have heard that financial advisors can help people like me start investing. After taking out all my expenses, I can afford to invest Rs 5000 per month. Will financial advisors help people with income like me?
Yes, a financial advisor should be able to help a person with an income profile like you.
If you can pay ₹2,500 monthly insurance premium of a traditional insurance policy, you can hire a fee only financial planner in less than the commission you indirectly pay insurance agent in the first year of the policy.
(Fee only financial planner is someone who charges a fee for financial plan creation and advisory, and does not receive any kind of commissions/incentives from mutual fund houses, insurers or other financial product sellers.)
The agent commission in the first year on traditional insurance products is 35%. So you pay ₹10,500 commission to the agent in the first year on a ₹2,500 monthly premium policy. You can get services of a quality fee only financial planner in ₹10,000 in India.
If your assets and savings potential is low, and your financial planing is relatively simple, planner can also agree to charge you a lower fee. Renewal fee of most fee only financial planners in India is less than 60% of the first year fee.
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Sachin Shah is a 30 year old Senior Software Engineer, working at an IT services company in Bengaluru. He and his wife want to plan for their retirement and also want to save for their child's education, wedding and for buying a car.
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