Want to Become a Crorepati? Find a Right Advisor for Yourself


26 Feb 2019 | 3 min read

Before delving out much about this topic, we would like you to know the statistics.

Around 70% of the Indian investors work with professional financial advisors, as compared to 54% globally (Source: Economic Times).

The term financial advisor refers to people, firms or digital services that help you manage your money to secure your future or to reach a financial goal. They can also help you set one such target. So, how do you decide who is the right financial advisor for you? As finances are diverse and vary from person to person so do their needs for a financial planner.

Let us talk about a few ways how you can choose the right financial advisor for yourself.

  1. Know your needs

The first step is to understand what types of services you would need from a financial planner. Nowadays, robo-advisors are also all the rage. These are the digital platforms wherein you have to enter your financial details and using complex algorithms; this digital advisor would plan your finances. However, such digital services are only helpful if you need assistance with selecting and managing investments. In case you have a diversified financial situation involving real estate, insurance, retirement funds, investments, etc., getting human help is advisable. So, assess your needs and then start looking for the right type of advisor.

  1. Consider the costs

Financial advisors charge an annual fee for their services which may vary based on the kind of services you avail. Usually, the fee is taken as a percentage of the amount managed. The fees of robo-advisors start at 0.25% while professionals may charge a median of 1%. Sometimes, they may charge a flat fee instead of a percentage. You should consider all the costs involved before selecting a financial advisor.

  1. Do your due diligence

 You cannot trust anyone with your finances so you must check the skill and standards of the advisor you choose. Ask them whether they are a fiduciary or non-fiduciary, what qualifications they have, what their investment philosophy is, the benchmarks that they use, etc. These financial planners would be making high-stakes decisions related to your money so it is important for you to know where they stand and whether you would feel comfortable leaving your finances in their hands.

  1. Check their securities license

Financial advisors are required to have a license for the services they provide. There is a variety of licensing for such financial planners so you must ask them about which one they have. An advisor can have a Series 63, 65 or 66 license or a Core Series 6 or 7 licenses. Such certifications are usually based on the type of service they are offering. For example, those dealing in insurance products may need a state insurance license. Once you shortlist a few advisors, check out the services they offer and the licenses for the same.

Some of the questions that you can ask your financial planner

  1. How much experience do you have as a certified financial planner?
  2. What is your highest educational qualification
  3. May I know your approach to financial planning?
  4. What is your client portfolio
  5. What are your standard fees
  6. Will you be the only financial planner working with me?
  7. Will any other gain from the financial advice, you have given to me

5.     Are you aware of the Chartered Financial Analyst?

      Perhaps they can help you make the best investment portfolio. American based CFA institute offers CFA to finance and investment professionals. There are 1,50,000 charter holders around the globe in  165 countries.  A certified chartered financial analyst is expected to have the following qualities –

  • Good competence
  • Planner
  • The clarity in financial decisions
  • Compliance to authorized laws
  • Privacy and confidentiality

Look for some SEBI registered investment advisor

  1. Read the terms and conditions

You must read the fine print before signing any papers. For example, the contract may require you to invest in speculative instruments, and if you do not understand it and sign, you will have no defense to plead your case in court if something wrong happens. To avoid investor’s remorse later, it is a good idea to read each and every fine print.

You should try and learn every essential detail about the financial advisor you are selecting. Even the things that seem less important, such as investment communication, can make quite a difference. You are seeking professional help with your finances because you know that you are not one. The advisor should also understand the same and not bombard you with investment jargons. It is his job to bring complex ideas and jargons to you in a simplified manner so that you can understand them better.

7. Don’t go for market-beating brags

When you meet some advisors, they will act like market-beating brags. Get away from them. Market investments are subject to market risks, and the advisor will tell you the best investment practices may help you outperform the market average. If some advisor is saying, ‘there is a market-beating performance, get up and leave the place.

So interview some of the financial planners, to make a wise decision. Once you choose a financial advisor, he is going to take the big money decisions for you, but the first decision of selecting an advisor lies with you. Do not hesitate in asking questions; ask them to provide you an example of how they managed someone else’s portfolio. See a report if they would agree to it. Do not fall into the trap of bragging advisors who promise unrealistic profits. Do your research, compare the options and the cost and then choose the right financial advisor.

The investment advisor can help you in the following conditions:

  • Advice on investment associated matters
  • Framing an investment strategy
  • Advice on transferring a pension with guaranteed annuity rates
  • Will not recommend any specific company’s investment product
  • Will help you manage taxes

Usually, you go for some safe savings instrument and end up getting 8% or 9% as the rate of interest. However, with the right advice and proper guidance, you can make more. We highlight some of the top mutual funds.

Look at the 3-year return from the above funds. In the initial days, there was a negative return, but after 3 years the performance seems good.  

Should you have any questions, give your details here. Meanwhile, you can check our blogs here and stay tuned with the latest industry updates.

Here you can read –

How to choose the best mutual fund for yourself

Recent Blogs