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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/

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