Choosing The Right Financial Advisor

1. Clarity

Be clear about what you want to get done. What are your financial goals? What do you expect the financial planner/ wealth advisor to do – is it only advice or are you expecting them to also implement the advice? What level of detailing and engagements do 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 prepare 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. Find out 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 advisors?

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 & how they change

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

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.