Monday, July 22, 2024
Monday, July 22, 2024
Home » My experiences as a fee-only financial planner for the last 12 years

My experiences as a fee-only financial planner for the last 12 years

by Jaylon Chang
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While I was trying to build a list of fee-only financial planners in 2013, it was by sheer chance that I encountered Melvin Joseph’s post on Facebook. Someone had asked him about mutual funds, and Melvin had replied that he had never sold mutual funds in his life. Then he immediately became part of the list, which has helped more than 1000 readers.

I met him for the first time in March 2015 and later in Oct 2016 during the Mumbai DIY investor meets, and then again in September last during the launch of Fee-only India: the launch of a movement to serve investors and advisors. I am thankful to call some of the most honest and ethical people in financial services friends, and Melvin is one of them. Melvin’s website:

Melvin Joseph and his wife Tessy
Melvin Joseph and his wife, Tessy

Now over to Melvin.

In the last 12 years of my fee-only financial planner journey, I have dealt with clients from different professional backgrounds, cultures, and economic statuses worldwide. It is a very fulfilling experience. The experiences I will share in this article are not preaching or Gyan. This is a real-life experience after interacting with many clients.ial freedom (early or late) were not the ones who kept fussing about returns. They were the ones who kept investing continuously and increased their investments year after year. They never withdraw money from their investments. They only came to the financial planner because the investments were not organized. Either there were too many funds, insurance policies or investments were spread across too many instruments.

Early financial freedom has its cons: Many clients insist on it. Some achieved it, and some even had to increase their retirement age. But the ones who could achieve early financial freedom or were on the verge of achieving it had no idea what they would do afterwards.

Though most of them had conveyed that they wanted to leave their job immediately and do something of their own or with less or no pressure, they could not leave their jobs. Some clients took 2-3 years to leave their job after achieving financial freedom. Some are still doing the same job. Others who left the job joined back after taking a break of a few months to a year. It looks desirable on paper- sitting at home and doing nothing but it is tough in practice. You lose your power, social interaction, and regular income, impacting everyone.

Covering the basics: Many clients were reluctant to cover the basics. The only thing they wanted to do was invest. It took a lot of effort from my side to make them understand the importance of covering the basics. Basics mean – term insurance, health insurance, personal accident policy, and emergency fund. The most important pillar of financial planning is covering the basics. Without covering the basics, there is no use in starting the investments. Even if you need to delay the investments by a few months, it is ok as you can cover the investment deficit as and when you grow in your career but do not ignore the basics.

Emotions: Keep your money and emotions separate. Easy to say, difficult to practice. Half of my new clients ask me if they should invest more because the market is 1%-2% down. Is it possible to separate your emotions and investments? The answer is No. You need to manage the emotions, not be devoid of emotions, and it comes with practice. The clients who used to message me five years back about a 1% downfall in the market now do not even bother to message even when the market is 5% down. Reason- they can manage their emotions better now.

Equity is not always necessary: I have many NRI clients from the Middle east. More than 30% of these clients have never invested in equity. All their investments were in FDs. Were they worse off than the clients who had invested in equity? Not at all. Some even achieved early financial freedom at the age of 40-45. So, equity is not necessary to achieve your financial goals. You need to invest more, presuming low returns from debt products.

Messy Portfolios: The clients who had made their portfolios messy were just because of 2 reasons – Tax savings and higher returns. Drill down your portfolio and see if you have bought too many products for these reasons.

Risk profile/Goals do matter: Clients who had never invested in equity suddenly want to invest half of their portfolio in equity because they heard that equity investments are much better than all other investments. “The market is at an all-time high, and you are still not invested in equity”, their friends will ask. Some of them invest, the market crashes, and then they turn to a financial planner. Result: they do not want to invest in the equity market.

Aggressive investors– All the aggressive investors will preach only one thing; the markets will recover. I have seen it in so many crashes. I will invest only in equity even if the goal is 2-3 years away. The time left for the goal does matter. What if the market does not recover in time? But it is much more difficult to change the attitude of equity investors than that of cautious investors. As a result, many clients had to postpone their retirement because they did not want to shift from equity to debt.

Skills: Everyone should learn the basics of financial planning, but what happens in real life? All my clients want to learn financial planning. A few learned in 2-3 years after becoming my clients. They sometimes ask me a few questions if they have any doubts, but after 2-3 years, they became independent. Some are still my clients for the last ten years as they are more interested in their profession rather than putting more effort into learning financial planning, and they are happy too.

If you are inclined towards learning it, please go ahead and be the DIY investor. But if you are wasting hours daily researching for the best product, additional 1% returns in mutual funds, FDs, etc., do not do it.

Utilize these hours to hone your professional skills, which will help you to earn better and invest more. A 10% -15% increment in your salary will help you to achieve your goals much faster than an additional 1% return on any product.

Everyone has a story: Financial planning is much more than finances. It is the client’s trust in his financial planner and vice versa. When clients and financial planners interact for the first time, they are strangers. But when the trusts start building up, the relationship starts changing completely.

Everyone has financial insecurities, whether a client has 1 Lakh, 1 Crore, or 10 Crores.
One of my clients was in fear of a job loss. There was uncertainty in the company, and there was no time frame fixed whether the person would be fired in a month or six months. The person did not want to tell his spouse and children as they would be stressed (of course, they would come to know if he lost the job), but this was a time of financial uncertainty, i.e., uncertainty, till the fear turned into reality.

Another client went on to say that her husband is least concerned about investing. He believes in spending everything. They did not have anything, even for an emergency.
One of the other clients told me that his wife spends too much on shopping. One of the client’s parents was pushing him to purchase a home though the client was not in favour of a loan.

One of the clients called me from Goa a few months ago. She told me her son had an accident and was in the hospital with a skull fracture. She requested my prayers for his recovery. She messaged me, “Please pray. God will hear your prayers”. The boy recovered fully, and he is in my daily prayers even now.

Half of my clients say that their spouse is least bothered about finances. The spouse does not know how much money she/he has invested and in which instruments s/he has invested. They are worried that if something happens to them, how will their spouse manage the finances?

There is another side of the story – One of the clients called me and said, Melvin, I have achieved financial freedom and am very happy. But the problem is that I cannot share it with anyone. My spouse knows all about this. I cannot tell my relatives because either they would be jealous, or everyone would start asking for a loan. We do not talk about money among our friends. You are the only one I can talk to everything about my financial success, and I know that you would not be judgemental.

Who would not be happy after seeing this level of trust from a client? I kept thinking about the old saying about completely trusting and not lying to your doctor or lawyer could now extend to one’s professional conflict-free financial planner too!
But the point is that everyone has financial insecurities that need to be expressed. Half of the problems, whether health, a relationship, etc., are because of financial insecurities, which need to be addressed.

While I have tried to pen down some of the customer experiences I have encountered over the past decade, one of the most important takeaways I have learned (my experience being on the other side of the fence) is that people look for a confidant.

It’s the same way you need a trusted partner, whether in your personal life or professional front- be it marriage, friendship ship or colleague to whom you turn for career advice. One thing I felt missing was a relationship with your partner with whom you can share your financial uncertainties, and that is precisely where we tried to fit in that particular role. It is always important for you to have that one person, i.e. that confidant with whom you should be able to share your financial story.

To sum up, everyone has a financial story that needs to be heard, and that confidant (to whom you can tell the story) does not necessarily need to be your financial planner. The financial journey is more fulfilling when you have a confidant in a close circle like your spouse, friend, sibling, or parents.

Since financial planners will have limitations in understanding the complete emotional part of the financial journey, it becomes easy to make financial decisions when you and your confidant talk to a financial planner and make decisions collectively. So, try to share your financial journey with your close ones. Be patient because even your financial planner did not earn your trust in a single day.

Source : FreeFinancial

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