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How to choose the best financial planner/ adviser?

You work hard so that you and your family gets to enjoy the fruits of your labour. You spend about 35-40 years of your prime life on work, just so that you may earn enough to meet your goals. If you are putting in so much time and effort to earn the money, how come you spend so little time to ensure that it is properly deployed/ allocated so that you may meet your goals?

Isn't it an irony that we spend so much time to plan a holiday or a birthday party, but would not spend time to manage our own finances?

Many find managing finances to be a exercise in drudgery. Some are plain uninterested in finances. If you are neglecting your finances because finance is such a bore or you would rather spend your time with your family than go over the brochures, balance the numbers and create a strategy to achieve future goals - you need to get professional help.

 

"When so much depends on finances, choose an advisor you can depend upon..."

 

But, you need to choose your advisors wisely as this can make or mar your future itself! You will find below some pointers towards how you could choose a financial planner/ adviser. Go through this carefully, before you make the choice.

1. Clarity

Be clear about what you want to get done. What are your goals? What do you expect the financial planner to do - is it only advice or are you expecting them to also implement the advice? What level of detailing and engagements you desire? Think about all these. Talk to others who have engaged financial advisors and firm up what you need.

2. Searching for an advisor

You may search online or identify someone through a reference. Or you may look up a directory and come up with a shortlist. Check if the advisors shortlisted have indicated that they would be able to provide the service you are looking for.

3. Education

Anyone can call themselves a Financial advisor, Wealth manager, Financial coach etc. You need to find out if they have the educational qualifications that prepares them for an advisory role. Certified Financial Planner ( CFP ) certification prepares a person for a planning/ advisory role. This is one of the most comprehensive courses available today on the subject of financial planning. Worldwide, CFP certification is accepted as the gold standard in financial planning. If the advisor has some other certification/ qualification, you need to examine that a bit more.

4. Experience

Experience is important. Findout how long the person has been in the advisory field alone. Ask them for proof of true advisory experience. Many advisors have just come into the field and you may end up being the guinea pig. Advisors with less experience may not have seen different situations as much as one with experience.

5. Knowledge & expertise

Check whether the person whom you want to engage has sufficient knowledge on the subject matter of advice. Usually a few well directed questions would let you know that.

6. Are they registered with SEBI as Investment Advisers

It is mandatory for advisors to register, if they are offering advice as per Investment Advice Regulations 2013 of SEBI. Ask if they have registered with SEBI. If someone is offering advice without being registered, you should be aware that they are not compliant & are flouting the rules for advisory services. Obviously, you should avoid them.

7. Find out details

Find out details of the services offered; what the deliverables would be; method of interaction; the process they follow during financial planning & post that. Ideally ask to see a sample plan & ask them to take you through it. This can greatly help in assessing whether the advisor would be useful to you or not. This interaction can also be used to find out whether one is a true advisor or is a product seller masquerading as an advisor.

8. Ongoing services & standards

What ongoing services does the advisor offer? Is that valuable to you? Are there any service standards which the advisor is committing to?

9. What and how they charge

Ask the advisor whether (s)he is a fee-only planner or they also receive remuneration in the form of brokerage/ commissions. There can be conflicts of interests if they are distributing products and also advising. Fee-only planners would charge much more than those depending on commissions. Find out and evaluate the value you may derive from engaging that adviser for the fee charged. Value is important than only considering the fee.

10. Referrals/ Testimonials

If you are going through a referral, so much the better. You will still need to find out whether the advisor is suited to you. Testimonials are indicative of the quality of work. However, don't just blindly go by them alone. Ask the advisor to share clients who have been working with them for at least 3 years ( preferably 5 or more ). Talk to these people and validate all that the advisor claims. Ensure that the clients you talk are not related to the advisor.

Identifying the best, top, top-notch financial planner/ adviser may take up some of your time. But choosing the first advisor who comes along would be fraught with danger - as you would then leave it to chance. This is too risky to leave this game changing decision to chance. If you follow these steps, you would end up with a competent, reliable financial planner/ advisor, who would most probably suit you.

Also, check out the following links to get further information on this important aspect -

  1. How to choose a financial planner in India?
  2. A short guide to hiring a good financial planner.
  3. How to choose a financial planner?
  4. 10 questions to ask when choosing a financial advisor