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Financial Planner Blog

Comprehensive Advice Wins

Suresh Sadagopan CFP IndiaBy Suresh Sadagopan, CFP

The toss-up between comprehensive advice and focused advice is more of a business model debate. Purely from the financial planner’s perspective, they need to be clear on what they want to deal with. The bits-and-pieces advice approach, in a way, is what many investment advisors are doing, and they mostly don’t get to know the full picture about client’s finances. Therefore, the advice they are offering, might be limited in scope and could even be off-track.

Scaled advice would have it’s devotees however, as many clients are daunted by the amount of information they need to provide to the planner, as well as the amount of time they need to devote, for the information-gathering process. Scaled advice is the proverbial short cut – where the client just wants a sounding board to validate their decisions. It is also used to clear confusions that a client might have regarding a particular area – like, say, a property purchase/ sale and the tax implications.

You Get What You Pay For

This kind of limited engagement works out very well for the financial planner who charges their clients hourly fees. The client wants a limited engagement and the planner is also, from a financial perspective, interested in a one-time engagement (much like a typical consultation session with a doctor). But the scope is limited here, and the client should understand that this does not come anywhere close to a comprehensive financial planning engagement. Also, since limited information is being given by the client, the financial planner would also work with the available information only and the advice rendered is accordingly limited, too.

Purely from a practice perspective, it is better to seek a focus area and stick with it. Offering everything would result in a fuzzy focus, which is to the detriment of the financial planner.

For anyone, who really wants a blueprint to their financial future, there is really no alternative to comprehensive financial planning. It is here that we consider all life goals and take the client’s complete financial situation into account, before offering any advice.

We offer comprehensive financial planning only, though we have cases where the focus may be, for instance, more towards retirement planning. But still, even in these cases, we would need to do a full-fledged plan after collecting all the relevant financial information and information regarding their goals. In fact, we have found that a financial plan for a person close to retirement involves a lot more work than the norm, as we have found that we have to reallocate the considerable assets which they have accumulated overtime, to appropriate asset classes, so that they are suitable in their retirement phase. Also, care needs to be taken to set up sustained inflows on a monthly/quarterly basis, to replace income inflows.

Complete Information and Client Cooperation Make for Better Advice

In comprehensive financial planning, we can be sure of what we are advising, as we have access to complete information. The client is usually more cooperative in this engagement, too. As a result, the advice offered here is more accurate and more helpful to the client because it is based on a complete understanding of a client’s financial situation. Only under these circumstances, can a financial planner assume fiduciary responsibility for their actions.

Personally, I have found this to be more satisfying as we actually get to shape the future of our client, through our actions. Since this is a major responsibility, a job well done also offers tremendous satisfaction, a heady-kick so to speak, when the plan made for the client helps them to achieve their goals. That provides that feeling of supreme accomplishment, which is worth all the sweat and toil, one has put in.

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