The philosopher Aristotle once said that ‘the whole is greater than the sum of its parts.’ Aristotle was ahead of his time when he said these words of wisdom. When you read further, you will understand why he was right.

Imagine you go to a car showroom to purchase your dream car, only to find yourself in an awkward situation. The dealer charged you only a few thousand rupees and gave you a ridiculous message: “Hey, thanks for coming in. You can collect the engine and other essential accessories from us. But, sorry, we don’t manufacture batteries. You can get it from Exide. The factory of Endurance can provide you with wheels and a braking system. You can get the steering wheel from Bosch and lights, including headlights, from Minda. I want to tell you that MRF will give you the latest model tires. The wiring system and mirrors can be procured from Motherson Sumi. The windshield is available at TVS motors, and Sony has the music system. JSW would help you with the body. After all, it is simply DIY!” (DIY is the acronym for Do-It-Yourself)

Can you do it? Is it that simple? What stops you from building an automobile company if you are skilled enough in assembling motor parts?

If you apply similar logic to the financial services industry, you will realize why a DIY model is challenging to replicate in your financial planning. But, as a matter of fact, that is the need of the hour. Read on to know why.

First, we should discuss what makes a DIY model essential in financial planning.

What Makes DIY Financial Planning Difficult?

From the analogy above, you would have learned that do-it-yourself never works in any field, let alone financial services. Well, here is why.

First, the scope is pretty narrow; there are minimal options. Many traditional investment advisors are specialized in just a handful of investment vehicles. So, naturally, they could recommend only a few investments or combinations of these few avenues within their grasp. For example, a stock trader recommends trading stocks; a mutual fund advisor helps you pick mutual funds, and an insurance agent will sell you insurance policies.

Then comes investment biases and bad selling, a common occurrence in the financial services industry. For instance, if your savings bank has investment products, they will pitch them to you. The bank officials have targets. To meet those targets, they will, in one way or the other, recommend you these products. This is why you can’t find the best financial planning solutions.

Now, let’s keep aside the biases and bad selling of the financial dealers. Customers also have their share of investment biases and bad choices that could influence their financial decisions. Under these biases and wrong preferences, they pick up investment options that they ‘feel’ appropriate but do not really suit them. Consequently, they seek help from traditional financial advisors who recommend a few investment avenues that fail to give adequate returns.

If you sidestep these hurdles and look for financial advisors online, you will have to choose between price and quality. Investment advice from experienced financial advisors comes with a hefty price tag, costing around a lakh rupees per year. For a middle-class individual, it is not a feasible option.

If the financial service industry is infested with biased advisories and bad sellers, don’t you think you should do your financial planning yourself? But what stops you then?

DIY Financial Planning Doesn’t Exist!

Honestly speaking, unless you love playing with numbers, finance turns into a dull and complicated subject. Unfortunately, no single metric or a sure-shot formula could guide you in picking return-generating investment assets. Instead, financial planning involves thoroughly analyzing price charts, balance sheets, asset classes, and financial objectives, which is not everyone’s cup of tea.

Unsurprisingly, only a meager 3 to 4 percent of the Indian population invest in stock markets. But, the participation is relatively higher in other emerging and developed nations. It is not because Indians can’t take risks. It is just because they don’t feel so. If done after meticulous investment analysis and due diligence, stock investing can be highly rewarding.

Other than the stock market, there are a good number of lucrative investment avenues that laymen aren’t aware of. That’s why they end up underinvesting or following unskilled financial advisors and losing money. Recent researches suggest that around 38% of Indian wealth has been invested in savings and Fixed Deposits (FDs), which hardly beat inflation in the last decade.

The problem is not intelligence. In fact, India has some of the most brilliant brains in the world. The real issues are the availability and dissemination of information. Even if you fetch the right information from the piles of inadequate information, it is so fragmented that putting them together and making sense of it is not a layman’s game.

Without a doubt, the internet is flooded with finance courses. But most of them are certification courses that fail to provide actionable insights.

What Is the Solution?

A straightforward solution is combining a financial advisory service with a do-it-yourself investment platform.

Today, portfolio management or financial advisory services are transparent enough to share the investment activities they carry out with your money. In addition, most of them act as your ‘personal’ financial planner, so you can work shoulder to shoulder with your financial advisor to grow your wealth. During the process, you can learn more about investing in a specific market, instrument, or certain macroeconomic conditions.

DIY investment platforms are everywhere – most brokerages and banks offer them as web-based or mobile applications. These applications give you real-world information and a DIY financial planner that helps you achieve your financial objectives. These new-age financial applications could transform how you plan your finances and invest your wealth. The surprise factor is that most of these applications are free.

So, by combining a financial advisory service that suits your budget and a free DIY investment platform, you can do your financial planning and, at the same time, learn to invest with a pittance. This combination is a one-stop solution for your financial planning and launchpad to financial freedom.

Justin Raj

Alpha Research Team