Our lives are made up of managing our finances. Because we not only need to keep our regular expenses in check, but we also need plan for our taxation, insurance, and retirement. Many of us neglect our finances because we don’t have the time or knowledge to do so. It is important to work with a financial advisor to help you manage your finances and reach your long-term and short-term goals. These are five tips to help you choose the right financial advisor for you.
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Verify the credentials
First, make sure to verify that the advisor is qualified and has the right credentials. The subject matter should be well-known to a financial planner. To start with a SEBI registered financial advisor is required. The Certified Financial Planning certification , offered by the Financial Planning Standards Board, is an accepted qualification that meets the global benchmark. Although a CFP certification is an option, it is not required. Financial planners can be any financial professional and others from related fields.
See the fee structure
Financial advice is not free. Good financial planners will charge fees for their services. If a financial planner does not charge a fee, they will be dependent on commissions and may make biased recommendations. While some financial planners charge flat fees, others may charge a percentage of assets managed. Discuss the fee structure with your financial advisor. You could be charged anywhere from Rs 10,000 to Rs 50k per annum by financial planners.
A periodic fee structure is better for small portfolios than a lump sum annual fee.
Experience is what you should be looking for
A financial planner should have experience in dealing with market cycles. They will be able to tell you how different asset classes behaved during these periods. This experience will be a great asset. Look for a financial advisor with at minimum 5 years of experience in advising clients.
The role of a financial advisor is to manage your money by understanding the macroeconomics and looking forward to the future. It’s multi-faceted. In choosing the best financial advisor, experience is more important than any other factor.
Set up a meeting
You should meet with the financial planner face-to-face or via video conference. It is important to find out how comfortable you feel talking with your financial planner. This will help you build a lasting relationship. It is important to build a strong relationship with your planner. Find out how often your financial plan is reviewed and how often it can be reached for advice or queries. Many financial advisors today are meeting clients online due to the COVID19 pandemic.
Refer to the references
A reference check is essential, just like when you visit a doctor. Ask clients if they are satisfied with the advice given. Ask the financial advisor if they spend enough time listening to the client and understanding their problems. Ask the client if they have noticed a significant improvement in their financial lives after working with the financial advisor. You can also view the advisor’s public profile and the ratings and reviews.