A good financial advisor is essential for your financial health, just like you need a Doctor or Physician. Recently I read one article about it, which mentioned that choosing the right financial adviser is as important as selecting the right Husband or wife, and I agree. It is imperative to choose it very wisely. But what is reality? Going to link some tweets to show what fact is.

Interesting. Isn’t it?

Very Bad and Shocking reality in our society. This one Will shock you a little more, and then I will start it.

Rajat Sharma, the financial attorney analyst, also mentioned one more point that was not shocking. He started work in capital markets directly or indirectly in 2004. From that point till today, the situation is not different. Worst. Many market manipulators are trying to make money by manipulating pennyworth stocks. Still, today, it’s difficult for many retail investors to educate themselves. Anyone can come to you and may sell you Mutual Fund, which may be harmful. From Harshad Mehta to Sahara To MCX To Chit Fund. At the same time, I am watching bankers and Brokers playing the role of Financial Adviser. Is it Good?
So How to Pick Financial Advisor is a big question. What He needs to know and whatnot. I am going to write it.

 

With age, our needs and expenditures, and income are changing. Our priorities are also changing. Like Need of 20 years old and 40 years old is different. After Marriage, your priorities are other. Plus, it would help if you took care of your future self as retirement will change many things. Plus, some Religions need to make some provisions for their last rituals. Some Religions like Islam make it mandatory to make provisions for their travel to their pilgrimage, which is Makkah.

Most of the time, I am trying to write How to make anything DIY. But it is not advisable to do your financial planning all by yourself. You need one Financial Advisor. So how do you choose one? What question to ask him? What to expect from him?

When do you need to talk financial Adviser?

Many people believe you only need to talk to a financial adviser when making an investment decision. OK. Let’s accept it. But here, I want to introduce a larger view of the word Investing. Like when any company buys their competitor, buying land is also an investment. Just like that, a marriage decision is also Investment. While deciding on your current job is also an investment as there may be an excellent option to invest your time rather than present. Maybe starting a Business is the right. Buying a home, Making some decisions about Family, Like when I was in college, ET Wealth, one financial magazine famous for educating investors, makes stories about marriages and financial decisions. One lady said that while in emotional distress, She gave everything to her husband as he gave her custody of their child. Defiantly not a good decision. That child needs some education. That Lady needs one house or some money until she finds another income source. So you can understand the need to talk with your financial adviser.

There you may think while reading this, what about Investment? Yes, it would help if you talked to FINANCIAL ADVISER. Some people take it from their broker or Dealer. Not harmful in some cases. But I will tell you A BIG NO. He doesn’t know bits and parts of your financial life. He may advise you on what is helpful to him, like selling or pushing some products. If you are trying to do it as cost-benefit, I frankly tell you to be bold. Spent money.

How and where to search for one?

There are straightforward ways to search. One is Google. You can search on the internet. The best thing is many financial advisers now keep their websites. A website will give you information about their performance, and you can underground many more things. One more plus point for searching on Google is, Nowadays, it also shows the rating and reviews on the search. It makes the whole process easy. The rating and reviews on websites may be wrong, but how can one manipulate ratios on Google.

Another way is to ask your friend or family member. Most of the time, you may get information. Ask them whether they like the service or not.

Here I want to discuss one thing I partly discussed with you: Talk to your broker or Bank Branch manager. Let it be in India or the US. Banks are nowadays doing so many things. Now they are not only holding your money. Maybe your manager will tell you about the money management service offered by the bank. But still, I believe that giving your money to your bank is not the right decision. Once again. Conflict of Interest. Interestingly I found something on Twitter. Credit to Ron Beaubian

What criteria or Filters do you need to use while searching Financial Adviser? (In short, Questions to Potential Financial Adviser)

There are many critical differences between a Financial adviser and a ‘Good’ Financial adviser.

  1. An excellent Financial adviser is listed and recognized. Authority knows him. So if you need to take any legal action, it’s possible.
  2. Educational Background. At least in India, it Graduation from Commerce and also needs knowledge about economics.
  3. Financial Planning Designation, credentials. CFA, CFP is the one which is preferred by many regulators, if I am not wrong.
  4. How long have you been offering services? Longer, the better.
  5. Soft Dollar practices, if any? In the asset management industry, Soft Dollars are the benefits provided to an asset manager by a broker-dealer as a result of commissions generated from financial transactions executed by the broker-dealer for client accounts or funds managed by the asset manager. Sometimes, Financial advisers receive such perks for Selling specific services or products. As a CFA Institute student, I believe this is unethical as it conflicts with the profession. Rajat Sharma also highlights that one must have integrity with his clients. Here I want to mention Bharat Phatak, Wealth Managers Pune. He was offered that if he sold a product worth ₹1 Cr, he would receive a package for two people to Dubai. Instead, he sold worth ₹250+ cr and still denied it as it is not ethical—a great example to follow.
  6. Is there any minimum fee? Important to ask. While I am reading articles like Go for free, some jokes are also available about the financial advisers.
  7. Will you or your assistant work with me? Sometimes it’s not him but his assistant.
  8. What personal financial issues can you handle for me in the future. Sometimes they may give you limited service.
  9. Will you attend to me? A financial adviser is the one whom you need to contact sometimes regularly. He may be in his work. But will he give you the right way of behavior, or is he ‘Form Filler IFA’ only? My own experience was when I was planning an interview with Rajat Sharma, Sana Securities; He was busy. But he told me that at what time he would talk with me—a big thing.
  10. A good Financial Adviser will take the time to educate you. An adviser is supposed to teach you what is happening with your money. In Market turmoil, a good financial adviser is the one who tells you what to do. It is important how. Some financial advisers I saw had beautiful presentations, Some short films. Or some of them are good teachers. Form Filler IFA will not even think about it. Form, Filler IFA is not IFA. Dave Ramsay once mentioned that Search for a Financial Adviser has a heart of a teacher. Agreed. But it will happen when he takes time to ask about your needs. You will stop the meeting if you don’t understand anything and request it.
  11. How do you get paid? No, I am not repeating anything. There is some hidden payment to your adviser that you may not know. There may be some contracts that are helping him reduce his costs.
  12. How and where are you investing your own money? Does your financial adviser have Skin in the game? For example, since his Partnership days, Warren Buffett kept all his money invested in his own company.
  13. Client category? An adviser may be giving service to retail investors and institutions also. Are retail investors more than institutions in his clients? Because both need different services. More retail investors as his clients mean he knows how to educate them and maybe knows what they need. More clients like you also tell that they can understand what you need.
  14. How are you going to communicate with me? E-mail, Call, WhatsApp, Facebook, Twitter, or anything else? Very important because some of the advisers don’t even communicate with clients. If the client needs then he will talk. It is wrong. Because some clients may not understand this, they will ignore everything.
  15. Frequency of Formal meetings? Though Investment and financial decisions are for the long term, one needs to check the performance of an investment. Also need to check whether what we are doing is going in the same direction.
  16. One more factor which Rajat Sharma highlighted is significant. When the Fundamental guy starts talking about Support, resistance, chart pattern, volume, Candle, or Technical analyst starts talking about Valuation, Overvalued, Undervalued, PE, Book value, and Understanding something is not going Good. Being a technical analyst, fundamentalist, or anything else, is not bad. It will become worse if one switches. I completely agree.
  17. Any other questions you want to ask.

So I am going to close it by saying.

A financial Adviser is one to whom you show faith about your hard-earned money, choose wisely, and live well.