How rich should I be to hire a financial advisor?

May 15, 2019

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?

1 Answer
May 15, 2019

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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