I have tried to think, several tens of times to understand why attitude of the people towards Financial Advisors is different from almost all other professionals / experts? Why the dilemma whether D-I-Y or seek expert help will never come anywhere but Financial Advice.
If I simply consider all other 'advice' based experts - Doctors, Auditors, Lawyers, Architects etc, there is one fundamental and easy to notice fact. Clients go to them seeking their advice but Financial Advisors go to clients. In other words these services can be put as 'Pull' and 'Push' services. I've seen they remain so beyond timelines, geographies and scale (how big the advisor is).
After all their elders have never sought advice on money matters but still achieved 'so much' in their life. They are wrong, we (money professionals) know it; they don't understand or care it. We professionals know that their elders have underachieved against what their money was potential of achieving. Now for them to realize, there should be one 'visible' person or they themselves should have two lives to compare D-I-Y vs Expert Financial Advice. As former is rare and latter is impossible, everyone continues to be the very same like his / her elders. To put it different way, the outcome of the bad financial decision / attitude, will be known at the end of one's career / life and they don't have anything to benchmark their achievement against. They don't even realize that they have made mistakes! And also, the price they have to pay for these mistakes is also not harsh…it is simply that they did not enjoy few things in life (needless to say again they don't realize and hence no regrets!). But think of taking a medical decision without a doctor, or building a house without an architect or fighting a law suit in the court without a lawyer or even say doing the electrical wiring or plumbing or repairing the car without a technician…the price of wrong decision / act is immediately visible and realizable!
In the developed economies, where the cost of living and people's aspiration to have better / lavish lifestyle makes them realize that they need really lot more money and wrong financial decision will be very taxing. In fact they have seen their elders suffer doing that mistake and they don't look at their elders so much but D-I-Y is still in exists widely…well not to the extent it happens in India. In India, Fixed Income rates, few maniac trends in Gold & Real Estate and people's contentedness (happy with minimum) have helped them cover their financial mistakes and has not exposed them to harsher consequences. Time has changed the gear…factoring in inflation and invest enough for future is gone! Today people are getting used to aspiring for more and better lifestyle. Their current high disposable income is supporting it. But world is advancing very fast and brining in newer convenience and luxury every day. It is also bringing newer opportunities and challenges for healthier and safer living. Imagine most of things people can't live without today - Smartphone's with 3G / 4G Data & Voice Plans, Other gadgets, Basic home appliances which never existed 2-3 decades ago, Choice of foods and cuisine that were not heard of few years ago, the normal entertainment options enjoyed today which were only fantasies in the past; Definitions of feeling and being safe, hygienic and healthy have changed dramatically.
So, if one invests by factoring in inflation, well, he / she has to live only on 'Food'!!
So, then what needs to be factored in ? It is a combination of one's aspiration, inflation and some extra for unknown thing! Hmm..what would that be like? well I don't know…it's like guessing the future!
For now, what I want to stress is, the consequences of financial wrong decisions will be much more taxing, visible and realizable, sadly more painful as well, in the future…to be precise, just couple of decades from now.
If I simply consider all other 'advice' based experts - Doctors, Auditors, Lawyers, Architects etc, there is one fundamental and easy to notice fact. Clients go to them seeking their advice but Financial Advisors go to clients. In other words these services can be put as 'Pull' and 'Push' services. I've seen they remain so beyond timelines, geographies and scale (how big the advisor is).
After all their elders have never sought advice on money matters but still achieved 'so much' in their life. They are wrong, we (money professionals) know it; they don't understand or care it. We professionals know that their elders have underachieved against what their money was potential of achieving. Now for them to realize, there should be one 'visible' person or they themselves should have two lives to compare D-I-Y vs Expert Financial Advice. As former is rare and latter is impossible, everyone continues to be the very same like his / her elders. To put it different way, the outcome of the bad financial decision / attitude, will be known at the end of one's career / life and they don't have anything to benchmark their achievement against. They don't even realize that they have made mistakes! And also, the price they have to pay for these mistakes is also not harsh…it is simply that they did not enjoy few things in life (needless to say again they don't realize and hence no regrets!). But think of taking a medical decision without a doctor, or building a house without an architect or fighting a law suit in the court without a lawyer or even say doing the electrical wiring or plumbing or repairing the car without a technician…the price of wrong decision / act is immediately visible and realizable!
In the developed economies, where the cost of living and people's aspiration to have better / lavish lifestyle makes them realize that they need really lot more money and wrong financial decision will be very taxing. In fact they have seen their elders suffer doing that mistake and they don't look at their elders so much but D-I-Y is still in exists widely…well not to the extent it happens in India. In India, Fixed Income rates, few maniac trends in Gold & Real Estate and people's contentedness (happy with minimum) have helped them cover their financial mistakes and has not exposed them to harsher consequences. Time has changed the gear…factoring in inflation and invest enough for future is gone! Today people are getting used to aspiring for more and better lifestyle. Their current high disposable income is supporting it. But world is advancing very fast and brining in newer convenience and luxury every day. It is also bringing newer opportunities and challenges for healthier and safer living. Imagine most of things people can't live without today - Smartphone's with 3G / 4G Data & Voice Plans, Other gadgets, Basic home appliances which never existed 2-3 decades ago, Choice of foods and cuisine that were not heard of few years ago, the normal entertainment options enjoyed today which were only fantasies in the past; Definitions of feeling and being safe, hygienic and healthy have changed dramatically.
So, if one invests by factoring in inflation, well, he / she has to live only on 'Food'!!
So, then what needs to be factored in ? It is a combination of one's aspiration, inflation and some extra for unknown thing! Hmm..what would that be like? well I don't know…it's like guessing the future!
For now, what I want to stress is, the consequences of financial wrong decisions will be much more taxing, visible and realizable, sadly more painful as well, in the future…to be precise, just couple of decades from now.
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