Skip to main content

Before you hire a Financial Planner!


We all have access to financial advisors in the form of our parents, siblings, or some friend who keeps on reading financial blogs to help us out with our financial queries. Though this all sounds good but at some point, in our lives we do realize the importance of professional advice and tend to go searching for a Financial Planner. There are pressing questions in our mind like how much to save for our child’s education, will I run out of money in my retirement?

There is no doubt that a certified financial planner will help you chalk out your future in a better manner than any of your friends. But, the answer to these questions vary from individual to individual. Your family circumstances, lifestyle, income, expenses, etc. Though a financial planner is supposed to give advice in your best interests but sometimes you do get to meet people who are more concerned about their own interests rather than client’s and you end up owning the products you never needed. Yes, there are rules/requirements which financial advisors should abide by before giving any recommendation but there are loopholes in the system as well.

At the end, it all falls on investor to decide whether the financial planner is worth the money he is paying for. There are few things one need to be aware of before hiring a financial advisor. Let’s go through them to have a better clarity.

How is your financial advisor charging you?

There are mainly three types of models: Fee based, commission based, and both. There are planners who make your financial plan, recommend you financial products as per the plan, and you can invest in the recommended products from anywhere. Then, there are advisors who get commission on the products they sell to the investors. And there are also advisors who charge both fee from the clients and commission from the products sold. Most of the times Fee only advisors have more ethical approach as they are not getting any commission on the financial products they recommend and hence give unbiased advice.

Is your Financial Planner qualified to offer financial advice?

Having a licence to sell doesn’t always make a financial advisor professionally qualified. You must ensure that he/she has proper education and certifications to back his advice. For e.g. a Certified Financial Planner will be able to chalk out your financial plan much more efficiently than an Insurance agent.

Is your Financial planner offering holistic advice?

Your financial life is not only about insurance, or FD’s or post office schemes. Your financial life includes every stage of your life where you need money. It could start from risk planning, to retirement planning, to your will or even your children’s education plans. So, ensure that your financial planner follows a holistic approach and shouldn’t be always worried about new or existing investments. He should review whether the financial goals will be met in time or not and what all actions are required to fulfil all your financial goals.

Is your Financial Planner promising heavenly returns?

 Sometimes we meet advisors who promise us double digit returns in 2-3 months period, and we        blindly believe their false promises. There is no magic wand when it comes to investments. Ask him  the basis of returns, the underlying assets where he is investing, if the investment company is registered or not. Don’t believe in sky rocket returns in a short time period because like everything else investments also need time and discipline.


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Comments

Popular posts from this blog

What to do when Stock Markets suddenly go up?

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

This May we have seen BSE SENSEX moving from the levels of 39,031 on 30th April to 37,090 on 13th May and then back again to 39,352 on 20th May. Such volatility in such a short period makes us doubt our investment decisions and questions our long-term plan of staying invested in the equities. This Market volatility has the power to change our investment strategies and at times even question it. Sometimes we think that we have missed a golden investment opportunity and on other times we assume that we have invested at a very bad time. At the very best it keeps us confused on our next steps.
John Maynard Keynes has rightly said that "Markets can remain irrational for longer than you can remain solvent." But how should we treat our investments when we come across such turbulent times and what is the right course…

5 ways to trick yourself into Saving Money

Saving money has always been a daunting task and most of us fail miserably at it. One can relate more to this after seeing the average savings contribution. Lavish vacation or a fancy car can always distract us from our long-term goal of owning a home. It was easier in the earlier times when the life expectancy was lower and there was no need to plan for the long term. But now with increasing life expectancy and rise in the nuclear family culture, it has become more important for us to save for ourselves rather than depending on our Children or the Government.
When it comes to money management, it is indeed difficult to infuse the savings habit if we are a firm believer of You Live Only Once ideology. Nevertheless, savings is important even if your mind stays more on spending rather than putting the money away for your goals. But as they say there is a solution to every problem. All you have to do is to trick your mind into savings. Here are a few tricks to nudge yourself towards th…