How to choose a Financial Adviser

Partha Sinha, Times of India 10/4/2012


    A financial adviser is a professional who would help you with your investments, keeping in mind the suitability factors of various products and the risks that come with them. And at the same time, he will help you recalibrate your portfolio to keep it on track to meet your long-term goals. Your adviser should be able to assist you in financial planning aimed at meeting various goals like savings, child’s education and marriage, retirement and, probably, wills.

    Usually, financial advisers would suggest you to have a mix of mutual funds, shares, bonds, insurance policies and gold meet your long-term goals. Unfortunately, however, not all financial advisers are capable of advising you on all these asset classes, for whatever reasons. So, it is necessary that you make the effort to choose the adviser who would best suit your long-term financial needs.

    You should look for a financial adviser who, among other things, is always concerned about maximising returns for you while trying to limit the risks associated with the investments being suggested.

    Top industry officials say there are quite a few things that stand between investors and advisers. For one, while listening to the customer, the adviser should be able to distinguish between what the customer is thinking, what his needs are and if there is any gap between his thoughts and the needs.

    As a customer, it is very important for you to understand what the adviser is talking about, and if there are any gaps between what he is advising and your understanding of it. “It’s important to understand if the adviser is skipping some steps and there is a tendency to jump to a solution (for you),” said a person who works with independent financial advisers (IFAs), training them to better their communication skills. For the adviser, the ideal approach is to go through the paces and not jump to conclusions, be clear about the solutions being proposed and offer a comprehensive basket of investment products.

    It is also important for the customer and the adviser to understand each other. Such bonding cannot develop over one single meeting, rather it can happen only when the customer and the adviser meet on several occasions and talk about the investment goals and other related things. An adviser should also use such meetings to build acceptability with the customer, a top mutual fund official said. “Comfort (between the customer and the adviser) comes from a series of meetings,” the official said.

    As a customer, it is very important for you to take references about advisers from friends and acquaintances and then move ahead to select the best one. Before selecting the adviser, you should meet a few of them, see with whom you are most comfortable and then take a decision. Also, as far as possible, look for an adviser who deals with clients with profiles similar to yours. Remember, selection of a good adviser is very important because usually the adviser would stay with you through several years of your life.

    Industry veterans also suggest some more things one should keep in mind, which are often referred to as hygiene checks. For one, you should ask them the number of years they have been in the business (choose the one preferably with an experience of five years or more), educational and professional background, etc.

    “Any person who is into continuing education relating to the advisery profession is considered to be the one who is in tune with the latest developments in the industry. It is seen as a strong positive for the adviser,” said the IFA trainer.

Must ask questions while selecting an advisor

1.What sets you apart from other advisors?
2.What is the advisory process you follow?
3.How do you evaluate investment products?
4.How do you monitor and review client portfolios?
5.How do you keep clients apprised of market developments?

What you should look for in an financial adviser

1.Experienced, capable of judging a good market from a bad one
2.Should be able to guide you with right investments as per your suitability
3.Should be trustworthy
4.Must provide you with comparison and analysis in your portfolio
5.His advice should not be just to suit own interests


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