Financial advisors: Scripting the future of wealth creation for Indians

Why financial advisors are best suited to guide Indians in their wealth creation journey in a professional manner, Vikaas Sachdeva explains

September 21, 2012 10:28 IST | India Infoline News Service

‘Financial advice’ is probably the most opaque financial concept today. A country like India has witnessed a lot of ‘self-help’ as far as managing finances is concerned—citizens rarely sought financial advice because they were unaware of such services or wanted to take care of their finances themselves.

This has led to a situation where Indians barely understand various savings and investment vehicles other than regular debt savings. This has created indifferent returns and sizeable opportunity losses for the financially ‘illiterate investors’ year after year. Even more worryingly, people have lost money in ‘get rich-quick’ schemes/ideas—the genesis of which can be traced back to incomplete financial advice.

This article will attempt to explore why financial advisors are best suited to advise and guide Indians in their wealth creation journey in a professional manner.

To invest wisely, financial knowledge is crucial. The average investor in India does not have the time to understand stocks in an intense manner, nor is he capable of undertaking research properly to follow market trends.

Dismal Indian markets

The unpredictable nature of the rupee is a reflection of the uncertainty in the international market. Notwithstanding international rumblings, the perceived value of the rupee has also been affected by domestic factors like inflation concerns, advance tax collections (in the second quarter of 2011) and a worsening political will to push through industry friendly reforms. With volatility pushing the envelope, it has become necessary for a financial advisor who can keep his head on his shoulders and make sure you stick for the long haul without falling by the wayside.

During good economic times, people think about using the services of a financial advisor and during bad times, do away with their services. However, once the markets go down and wealth creation and preservation becomes critical, the benefits of hiring a financial advisor are innumerable. It goes without saying that if their services were used in good times, it would also help come out of the difficult times in the best manner possible.

Remember that a financial advisor is supposed to know the intricacies of the field he is in—he can guide the investor through an indifferent period by helping him make prudent and efficient financial decisions.

In the finance world, time is equal to gold

To invest wisely, financial knowledge is crucial. The average investor in India does not have the time to understand stocks in an intense manner, nor is he capable of undertaking research properly to follow market trends.

On the other hand, a financial advisor has the resources to capably perform more research than the average investor. He has quicker access to relevant financial information and can follow and react efficiently to capitalise on a market trend.

Importance of proper resource allocation

An individual has several priorities in life, starting from his children’s education through to their marriage and finally, building a retirement fund. In India, we often hear stories of how parents are left with little or no savings after spending lavishly on their children’s weddings. In reality, how many Indians are able to successfully allocate resources for their family needs?

A financial advisor can help you prioritise your goals and ensure that the long term financial requirements are taken care of. An ideal advisor plays a central role in the client’s lives by helping them pursue each milestone while minimising losses.

Erase your tax worries

The yearly filing of taxes is mostly considered a troublesome ritual by Indians. In India, financial advisors are often besieged by individuals who have no clue on how to file their taxes or make their investments. A financial advisor provides a clever tax saving plan that will ensure that the individual benefits the most.

India has a growing list of small tax defaulters and it is clearly evident that these individuals have a lack of financial planning in their lives. By employing a wiser approach to tax filing, their tax niggles can be taken care of efficiently.


India presents the financial advisor with a wealth of opportunities. As an Indian first and also as a leading finance professional, I would recommend seeking the services of a financial expert (through any fund house or self-employed) to plan and grow your finances. As I make this statement, I would also like to say that a financial advisor is not a magician. You must remember that it will take time to get results and that it is a joint effort. You will also need to review your joint decisions regularly to ensure that the path to your goals is being followed.

The ideal financial advisor will be frank enough to tell you about your exact financial situation, even if it looks troublesome. Once you have chosen a financial advisor through proper diligence, you should rely on him completely and build a foundation of trust, around which you can pursue your financial goals.

The author is the chief executive officer at Edelweiss Asset Management Ltd.

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