Financial Planning as all of you know is an important aspect of our life and we cannot choose to ignore it. We can do it ourselves or there are professionals whose expertise we can avail of. If one has to do it by himself/herself, one has to spend quite a bit of time on research and one also needs to have an affinity to do this kind of activity. It is also not a one-time activity but a continuous one. The other option is to choose a financial adviser who can make a comprehensive plan and manage it on a continuous basis. Needless to say, it is important to choose the financial planner carefully. We have listed down some factors that will help to choose a financial planner wisely.
- Qualifications/ Credentials and Affiliations – There are many salespersons of various financial products that consider themselves financial advisers. Your best interests might not be in their agenda. Ensure that the adviser has relevant qualifications/ certifications or that he/she is a certified financial planner (CFP). It is also important that they are not associated in any position with any MF or Insurance Company. You can also check here for certified planners. Once you have shortlisted a few of them, try to get more information about them from their websites, social media or their existing clients if possible. Once you have done that, you can have a discussion with them to understand their suitability.
- Financial Adviser’s Pay structure – Check out how the financial adviser gets paid. If the majority of his income is commission based, his interests may not be aligned with yours. It is better to have financial planners who a major portion of the income as a fixed component.
- Soft Skills – The financial planner should have certain soft skills. He should be emphatic to your financial needs and goals. He should have good communication skills as he should be able to educate you about the products. He should genuinely listen to your goals and financial concerns and understand them and accordingly design a financial plan.
- Some other things to consider are:
- The financial planner should not be concentrating only on or bragging about his past investments but understand your current situation as much as possible. Relevant questions to understand your long term goals, risk appetite etc. should be asked.
- He / She should have regular interactions with you whether the returns are positive or negative.
- Get a sample financial plan and ask him for explanation on the same.
Even if you are paying a professional for financial advice, do keep a tab on the portfolio. Be aware of the investment options and ensure that your financial plan is not very unusual and is in line with the financial markets.
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