Do it Yourself(DIY) v/s Qualified Financial Planner(QFP)

Personal Financial Planning is tough, serious, often boring and yet, most of us keep doing it ourselves for most of the times. Thankfully, the tough task usually is made easier by quite a few of helping “well-wishers” i.e. LIC wale uncle or Bank wale chacha or CA bhaisahab. They not only often (perceivably) understand the complex financial markets better than us but also willingly lend their advice and making our DIY personal financial journey a pleasant one.

So while we rejoice at managing one’s financial affairs, there are often times when an “Expert” advice is needed. Broadly there are three category of occasions:

1) When you face acute financial crisis month-on-month.

2) When you start earning so handsomely, that you wouldn’t know what to do with your money (this would indeed be amazing and a desirable situation.

3) When you take some big decisions of your life i.e. buying a home, getting married etc.

At such occasions, it’s worthwhile to understand the difference between DIY Financial Planning vis-à-vis QFP driven financial planning.

At first go, the difference is self-initiated weight loss attempt v/s the one driven by a professional trainer. While the later attempt is expected to give quick results, there is a price to be paid. It’s a usual experience that one is likely to have a tendency to postpone any expenditure on personal trainer till one reaches an uncontrollable stage. However, in case of personal Financial Planning, the same may not be desirable as financial markets are highly dynamic and mostly unpredictable.

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So, let’s understand what is the difference between DIY and QFP Personal Financial Planning

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It’s your life and your money. Shouldn’t you be the one who controls all the aspects of your money and be responsible for it? This thought makes DIY financial planning always favorable. However, is it bad to seek someone’s advice? Just because you are an automobile enthusiast and know everything about machines from servicing, maintenance, performance enhancement, should you not never visit a servicing center? DIY financial planning approach is good and is certainly easier these days with widely available information. However, it’s really a matter of your interest and willingness. A QFP has an edge over your knowledge as they have resources and are tracking complexities in financial markets continuously. You can decide if you are interested in devoting your time in acquiring this knowledge or rely on an expert by paying a small fee. You may continue to devote the same time in building your core skills or hobbies that give you more output or pleasure.

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You will always be biased about your own money matters. A QFP can be assumed to be largely free from all biases with respect to your personal finances. While both these situations have their own pros and cons, one can decide on it basis the clarity of vision required.

Your DIY financial plan may be fantastic, but to implement it, discipline is critical. Subtract discipline from this plan and you may end up nowhere. This is where a QFP comes for help. It’s just like a dietician’s advice. Ample advice is available on the internet and one can follow it by reading over the internet. However, if you are paying a small fee to the dietician, your effectiveness and outcome can definitely increase.

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It’s important a structured approach to one’s life and financial plans. A QFP is far more well equipped to bring in the same for you than what you can for yourself.

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Plans built well need execution excellence. Ability of seamless and hassle-free execution is something that a QFP can offer you. While DIY financial plans can also be executed well by yourself, however at a small fee, a QFP will surely take care of efficient execution for your plans.

While all the above points indicate that financial planning handled by QFP is expected to be a smoother and expectedly better for oneself. However, one needs to understand that ultimately it’s your own hard earned money and hence the responsibility lies completely with you. Hence, one needs to have a more balanced take on the above and find out an appropriate action plan.

Arthasarathi's take

Arthasarathi strongly believes that “Financial planning leads to control, which leads to Happiness” for an individual. There is no doubt that financial planning is critical for an individual and even when a QFP is involved, the ultimate responsibility rests with the individual. However, there are many experts who relentlessly work to make this process of financial planning easy for you to handle and understand. One should respect expertise of a QFP and seek their opinions, which charting one’s own financial plan. To understand steps to construct a DIY Financial Plan,click here.

Few parts of financial planning process can always be taken care by oneself and it’s extremely important that an individual should take a responsibility of the same. Arthasarathi strongly recommends using an expert opinion and build a plan for yourself using his / her expertise. However, the extent to which a QFP’s involvement is required depends on your assessment of current financial plan and to what extent do you need a financial planner’s guidance.

To decide, how to choose a financial planner suitable for yourself, please click here

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