What is the ideal fees for paid Financial Planning?

POSTED BY Urvashi ON November 28, 2010 1:21 pm COMMENTS (13)

Hi,

After taking care of all my monthly expenses, i can save upto Rs 10000 per month , i would like to get paid financial planner .Please advice what can be the fees & what services ill be given?

13 replies on this article “What is the ideal fees for paid Financial Planning?”

  1. Sowmi says:

    All,

    Already i posted this in another forum. I believe this is applicable for all spheres of life. Let us take this example. As a audience we all can see and even criticize how tendulkar is batting. Yes we can understand the intricacies / technicalities too but do we able to do stand in the middle of the pitch and play the real game ? In my view certainly hiring CEP or CFA will be worthy decision and after some point we can’t even able to understand or imagine the intricacies or depth of the subject. Yes we may have talents but who has the time to go for an in depth study if you are already involved in an different field and have enough time to focus on your own job. But the KEY is the selection of the CFP. i don’t give much importance to the fee as long as it is quite realistic but definitely look out a professionalism of that person. This means before hiring i will ensure what process he / she is following and what kind of outputs (details) we can get at each stage. Also i will check for the report formats etc and time they will take for finishing the entire cycle. Please note a good entrepreneur need not be a good manager and vice versa. So each role demands a unique talent and skill set combination and this concept will be applicable here also. A degree of CFA / CEP does not guarantee that we can get best results from them but the real attitude of the person towards providing a genuine customer services alone matters most. 🙂

    I think this problem will be minimized once top level companies enters in to this market i.e.similar to hospitals let they hire the CEPs and take care of proving payroll etc. We as a customers get an appointment and get the service. By this way the above mentioned standard processes / professional services will be taken care by the organization itself.

    Cheers
    Sowmi

  2. jignesh says:

    Hello,
    First of all this site is fabulous for learning and i am surprise to know still a person need Planner. well other than this site just visit http://wealth.moneycontrol.com . the complete page is for financial planning. just you need to input your data ( which even CFP will ask you to provide). so only you are the one who can provide data and once data is available you own can generate your asset allocation, your risk factor and do a plan accordingly providing you have your goal decided. khalas…

    why need to pay if you are aware with different options available for investment and insurance.

    Even i came across some planners who first ask 25K for complete planning and then with bargain they are ready with nil amount if i invest through them. How you will take this matter??

    also you are your own boss and you can review your plan ( as plan doesnt require daily review ) i am sure you will get time once in year to review your plan and can do require changes if needed by yourself.

    well i am sharing info and hope FP will not take it personally.

    regards

  3. Ankur Lakhia says:

    In my opinion, fees are secondary consideration compared to getting a good financial planner as first step. You can find many planners but the one who understands your personal financial situation, your knowledge of money matters, your comfort levels with various types of investments and your risk tolerance is difficult to find. If you get a planner whose interests are not aligned with yours then it would not be good for you. Hence, first thing is to find a good planner and then think about fees.

    Now a good planner will always be in demand and, being a human, he will have limited hours to spend on each client. Therefore, his fees would be higher than otherwise which might seem unaffordable compared to amounts being invested.

    Even if you find good planner at reasonable cost, it would not be prudent to leave your entire money management to that person, what if his services are not available in future for whatever reasons.

    Therefore, I think the best way out is to do it yourself. Spend time & efforts to learn about various aspects of money managing. Site like this can be immensley helpful. You can hire a planner if you like but you need to be able to understand the reasons for whatever he recommends. It is you who need to be in driver seat and not planner. Afterall it is your money and no one else has more interest in it than yourself.

    Hope I do not appear like giving lecture. I just thought of writing down what I felt.

  4. Urvashi says:

    Hi Hemant,

    Thanks for adding your one cent it has really made me richer! I like your point wherein you say Financial Plan & financial planning is different & that financial planning is not only investment plannning.

    Hemant right now im not getting exact questions but it would be really helpfull if you can explain a bit more on above two points.

    Thanks
    Urvashi

  5. Hemant B says:

    Hi Urvashi,

    Most of the concerns are very well handled by Nandish & Shashank.

    Let me add my one cent to it:

    1. If you think Financial Planning is only about investment planning you should not go for it.

    2. There can be different charges depending on the plan(Basic & Detailed). It also depends on the level of engagement as mentioned by Shashank.

    3. Also remember there is difference between financial plan & financial planning. 🙂

    4. Meeting face to face is good idea but think if you were NRI – still you were expecting a face to face meeting.

    5. Fees is normally charged on yearly basis. Second year fees is normally 50-60% of first year fees.

    6. Best way to choose one will be like suggested by Nandish – Interview 5-6 of them before choosing one. (Hope you are not unlucky like him)

    Some time back we had a long discussion on “how to hire a financial planner”
    https://www.jagoinvestor.com/2010/01/a-short-guide-to-hire-a-good-financial-planner-in-india.html

    If you have any specific question feel free to ask.

  6. Urvashi says:

    Hi Sada,

    I m happy to find somebody with the same issue, this will encourage other people also to participate & we’ll be able to get better info.

  7. Ramesh Mangal says:

    @sada

    Not taking any interest in having a face to face, looks not so great for me. And checklist for what?

    Another thing, 5k for a normal plan and 15k for a detailed plan. Are there really two types of plans? In my view, there is only 1 single plan (tactics you can change, but long term strategy is only one for any individual/couple). If I were you, I will ask him what is the difference between the two and suppose I opt for 5k plan and if I like it, can it be converted into the 15k plan.
    Are the plans payable only 1 time or it needs yearly updates? what about payment at that time?

  8. sada says:

    Urvashi,
    I can see me in your sitution, coz iam also travelling in the same boat. Recentlty i contacted a FP who is not showing interest to meet us face to face but has sent checklist. He is charging Rs.15000 for detailed plan. and some 5k for normal plan. Here we are struk. Which one to take ..is it worth to go for detailed plan? My husband thinks it is expensive.
    But my honest feeling is to go for it. Since we know very little about finance related stuff,
    (when we know just terminology not real figures and calculations) better to take help from professional though it is at a cost. I am convinced with Mr.Shanshank’s reply to your query.

    Rgrds,

    Sada

  9. Urvashi says:

    HI Nandish,

    Thanks for the insight, as per your reply the first thing which comes to my mind is, learn & do it yourself ! :), Cant believe in many ppl (please dont mind , just my gut feeling). i agree instead of asking questions in a forum like this i should be calling CFP’s but as i mentioned above , im new dont know a lot about it. Also im a bit cautious about calling anybody & everybody on net.(there are a lot many of them).

    One more point which i agree is that, service is important & not some commision friendly money hogging agent. But it’ll probly take long amount of time just to find about a person & if his services are as per my liking , hence the shortcut of asking a question in the forum.

    I dont want anything for free (ek pe ek free, is not happening. since we pay more that way financially & emotionally). It is just that i need valueaddtion in a way which is affordable to me. I hope you agree.

    Regards,
    Urvashi

  10. Urvashi says:

    Hi Shashank,

    Thanks for the crisp,clear & wel calculated explaination, i was exactly lookin for this. Regarding fee structure, see hiring a Financial planner is a must but fees is one of the major issues to be addresed.

    My problem being i m new to this field it is only recently that me & my husband decided to do FP. But then again with the little amount of knowledge & info gathered from this website we did our own small little excercise & found that we can invest not more than 20%(ie almost Rs 10000) of our income. Hence the question about amount of fees, ideally if i get a good financial planner our money would grow by almost 15% PA in long term.

    Now think in this way, if i’ll be paying 15% of my total annual investment just for fees , its like almost that value of my investment stays where it was (please educate me , if i m going the wrong way), ignoring the inflation rate aswell (which will take it to negative ;( ).

    This is just small amount of calculations from an amature, ppl please guide me to the right path.

    Thanks in advance.

  11. shashank kashettiwar says:

    Urvashi,
    I liked both the comments appearing above. Still I know your curiosity about justifiable fees to be paid to a planner would remain. It’s natural. Most of us are like that. I will provide my take on this subject.
    Two important things regarding the fees is; it should satisfy the customer and it should be remunerative for the planner as well for all the efforts he is going to put in and apply his skillset to improve the client’s situation.
    If we start thinking from the time spent for the exercise by the planner only and discount the skills( as if considering everyone is almost equally skilled), then the fee will depend on the number of hours that are put in. What hourly rate me as a customer can afford and also justifiable for the planner too! I will explain it with an example. Suppose your yearly income is say @ 5 lakhs. So roughly monthly income is @40,000/- Every week you are putting in @50 hrs of work. So every week the earning is @10,000. So your hourly rate of earning is @ 200/-. Now will you agree that the planner who is going to advice me should have a labour rate atleast this much. Plus he should earn a profit on his labour. Plus he has to incur other fixed cost/overheads. So an hourly rate of @ 350 to 400 would be justifiable for a person earning @ 5 lakhs.
    The comprehensive exercise of financial planning may take efforts in the range of 12 to 20 hrs. (It may take even more depending on the complexity of the situation and how much support , research and coordination efforts are required. May range from 40-60 hrs in the set up year). So for a person of incvome @ 5 lakhs the fees could be 5000-6000/- and may keep on increasing for higher income levels. Now ofcourse there are different models. But overall as the income is the key indicator of the complexity of the situation to be handled the fees for a 10 lakh income could be justifiably @ 10-12000 and for @20 lakhs income 15000-20000 fee is a reasonable figure.
    I hope I’m able to satisfy your curiosity!!!

    shashank

  12. Sohil says:

    Well you cant get the exact answer to this querry.

    But at start i feel even for a person who have a saving of say 60000 annually.

    I guess starting from 3000 for a year wont be a bad deal.But yup for that to happen i guess a one time fee of another 2000-3000 would be require to create your history ,calender or say biodata of your financial history which is most important..

    After that its just the suggestion and investment by you to do thats it.Most important is the chart of your finance which shows your goals,investment done,etc.

  13. Nandish Desai says:

    Hi Urvashi,

    Will you ask the same question for a getting a HEART Surgery instead of financial planning on such forum, NO I know that (Imagine if you were to receive a coupon for heart surgery – Buy One, Get One FREE! Ridiculous – yet that’s what most people focus on,FEES and they call themselves “PRICE SENSITIVE”)………. I firstly appreciate your commitment towards your personal finance……… This is my first reply on jagoinvestor/ Forum. Instead of giving you clue on different fee models I would like to share my experience with you. Three years back I decided to hire a financial planner/ advisor who I though would help me in managing my family assets. I met around 25 people at that time and for all those I was just one more business target to be accomplished. For them it was not a human being sitting in front of them it was a commission sitting in front of them. I told my father this will not work as none of them were listening to my financial concerns and commitments…. After that experience I decided to take charge of my finances and took care of it myself .

    I would like you to answer something for yourself before getting into the FEE part. What is the one thing required to convince you about before you buy any product or service? …………… I am sure your answer will give you clarity on choosing a financial planner….. If the answer is VALUE that is something you should look for in a financial planner…… Financial planning is all about trust and intimacy, you should be able to have 100% trust in the financial planner and planning process, you should be able to enjoy the process.

    I hope my reply helps you Urvashi, instead of asking people call a few financial planners and check their commitment level……. Know their process……. See how it can benefit you………. See how it can uplift your financial life….…. See how it can get you in control of your finances…. See how it can educate you on your personal finance……..Put your financial concerns and commitments on paper and see which planner can help you in that……Look for a change driven financial planner………You will have to do this rather than taking people’s opinion on fees…..

    All the best. My invitation Don’t go to 2011 with out choosing a financial planner…

    Warm Regards,
    Nandish Desai

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