Why Financial Adviser
One of my clients had a home loan of Rs.75 lacs remaining period was 15 years and he wanted to prepay his loan. His loan was running at 9%. He had recently got a reduction of rate from bank of 0.25% and was happy with the same. He approached me for my view if he should prepay the loans.
I asked for his sanction letter of loan and found that loan is linked to old regime of MCLR and even at 9% he is paying higher rate. I asked him to ask his banker to link his loan to repo rate or Treasury bill rates as per new directive issued by RBI. Also not to close his loan as he will lose benefit of taxation since he can save tax on Rs.2 lac of interest on loan. Which brings his value down to effectively 1.4 lacs (as he gets 30% tax benefit) on 2 lac payment.
My client saved EMI of 10 months effectively 7.7 lac worth of payment in future and invested funds kept for loan closure in instruments providing higher return and flexibility.There are many other differences which a good financial adviser brings to client. It is not only investment or risk cover but overall financial wellbeing which an adviser should be responsible for.