At Personalfn, we regularly meet clients (both existing and prospective) for their financial planning needs. Many of the prospective clients are unsatisfied with the advice/service rendered by their existing financial planners. These clients often turn out to be victims of mis-selling/poor advice. By the time they realise this, the damage is already done. We think it would help investors if they had a ready checklist of parameters that they can refer to before employing the services of a financial planner.
Why you need a financial planner?
Before we venture into how to select a financial planner, let us first understand, why you need a financial planner in the first place.
The financial planner is someone who can help you invest across investment avenues based on your risk profile and investment objectives. Post-investment, he monitors your investments and ensures that you are on course to achieve your investment objectives. If necessary, he suggests changes to your financial plan so that you are able to achieve your investment objectives as planned.
Given the critical inputs provided by the financial planner in helping you achieve your financial goals, it is important that you select the right financial planner. We outline a simple 6-step strategy that you need to consider before employing the services of a financial planner.
Certification
More than anything else, this is a pre-requisite from the compliance point of view. Your financial planner should be certified and registered as a mutual fund agent with AMFI (The Association of Mutual Funds in India). Ensure your financial planner and his team members are certified.
Competence
Gone are the days when financial planning simply required delivering application forms. The traditional "one-size fits all" approach is passe and the sooner financial planners recognise this fact, the better it is for all concerned, especially their clients.
With the increasing list of investment avenues on offer, selecting the one that suits you the best is becoming a challenge. To that end, competence and skill set are the basic criteria that investors should look for in an investment planner.
Financial planners should be competent enough to provide you with a solution that can help you in achieving various objectives such as retirement and child's marriage/education. Furthermore, the recommendations offered by your financial planner should be backed by solid research.
Value-add services
In addition to financial planning, your financial planner must provide related, value-add services that can assist you in the investment process. On-line tools and calculators are some of the more popular value-add services. These tools can help you keep track of your investments. These value-add services must form an integral part of the financial planner's offering.
One-stop shop
Every individual has different needs and the same undergo a change over a period of time. The financial planner should be capable enough to understand these needs and offer suitable products to fulfill them. Also, he should provide you with the entire range of investment products from mutual funds, bonds, fixed deposits to small savings schemes. In other words, he should offer a "one-stop" solution for all your investment needs.
Objective advice
The financial planner needs to have thorough knowledge of all the products offered by the various companies so as to provide unbiased and meaningful recommendations regardless of how much he stands to gain by way of commissions.
Albeit evaluating the investment planner on this parameter may not be possible initially, you should be able to do so over a period of time (alternatively, references can prove useful in evaluating financial planers on this parameter). Providing objective and unbiased advice, which is in your interest (i.e. client's interest), should be the planner's number one priority.
Accessibility
One of the common complaints from investors is that their financial planner is unavailable/inaccessible and therefore unable to provide adequate/prompt service. This is particularly common in a one-man setup where the financial planner's services begin and end with him, with little or no backup.
If the financial planner is preoccupied with some important clients or if he re-locates, it leaves you in a soup because your financial plan is in limbo. It is best to go with a financial planning initiative that is run by teams (as opposed to one-man setups) to ensure continuity of your financial plan.
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