Requirement of Advisor in times of crisis.

Can you do without a financial planner in current times? 

Currently we are living through the worst pandemic in 100 years. Prolonged lockdowns brought in place to halt the spread of the disease had also brought the economy to a grinding halt. This is leading to severe job losses and salary cuts now and in the months ahead. For those with so-called secure jobs are also facing a big erosion in their equity portfolios and drastic interest rate cuts in their debt investments. This has resulted in a lot of financial uncertainty for people. 

It is in situations such as these, that sincere, unbiased and trustworthy financial advice is very important. The services of a good financial planner can help you navigate through these difficult times and help you manage your finances better.  I have always stressed on the importance of financial planning, but in a crisis like this, having a financial planner and a plan is a must. Let us see why. 

1. Uncertain times: We all know that these are uncertain times. In such times, people tend to take rash decisions or act out of fear. However, such actions could be detrimental to one’s finances. One also tends to act on the advice of others who themselves may not be in a position to provide the right financial advice. This is why it is a must to have a financial planner. A good financial planner, with his or her experience, would have advised his clients through many such uncertain times and would be rightly placed for this role. As an analogy, let us assume that you are on a ship and it has been caught in a storm. Would you not want an experienced captain to navigate your ship safely and bring you out of trouble? That is exactly what a financial planner can do. After all, it is wise to leave it in the hands of the experts when waters are choppy. 

2. Volatile markets: The markets have fallen drastically since the beginning of the year and even now continue to remain very volatile. As a result, investors have notionally lost a lot of wealth. The market volatility has not only impacted stocks but also equity mutual funds which have given very low or negative returns. In such a situation, it is normal for an investor to panic. An investor would be faced with several questions – whether he should exit certain stocks, buy more of some, continue with his SIPs, and so on. While some of these answers could be generic, some could be very specific to the investor based on his risk appetite, goals and so on. Like we saw, it is important that one takes action based on the right advice not only to protect one’s investments but also for the necessary peace of mind. In the current scenario, there is a lot of advice floating around and one cannot be sure which advice is actually good or worth following. A good financial planner can be the true friend one needs during such times because he knows your financial situation better than anyone else. 

3. Changing course: An event of such magnitude is certain to affect our portfolios in more ways than one and one would need to analyse the impact, take stock of the situation and make certain changes so that one’s long term goals stay intact. For example, you may need to replace some funds which have consistently underperformed the benchmark or tweak your asset allocation to take advantage of likely post-pandemic scenario. If one of your long-term goals is near, you may have to take some steps to ensure that the goal is not jeopardised. Goals which are further away may require a different treatment. The pandemic has also taught us the importance of health insurance and more than ever now is the time to review one’s health insurance in case you need it. All these are critical decisions which would affect your finances going ahead and also influence how you will meet your goals. Taking advice from a financial planner is vital now as you need right advice to act on your finances. 

The pandemic has affected our finances in more ways than one. For those who have been trying to get a grip on their finances, this is the right time to seek credible financial advice. Even those who have been managing their finances on their own so far and have some experience in financial matters would do well to consult a financial planner to take charge of their finances in a world rocked by the pandemics and uncertainties.