Expert advice

May 20, 2013,15.37 IST

Sticking to advice of your Financial Planner is essential

I’m always amused by people who engage us for financial planning and then start giving us advice! These people try to convince us about why we should include real estate in our recommendations, send lots of inputs on why gold is going to reach USD 2000 per ounce in a matter of months or why their money should not be invested in equity assets...

It is indeed curious, as they come to us on their own accord for advice and start “moulding” our thoughts, even before we have fully understood the case and have offered our opinion. It is like going to a doctor and then telling him that you feel you have typhoid ( as many in your neighbourhood have it ) and pressurizing him to prescribe medicines for typhoid!

It is best not to be opinionated and surrender one’s skepticism and instead trust the advisor. That is when one can get good advice. But the main task is to find the right advisor & trust them enough to do exactly what they ask you to.

How do you find the right advisor/ planner?

There are a few things that need to be done to get to the right advisor.

>> Ask them – What business are they in? What are the type of clients, they advice? What are their services? Find out if they have experience in advising people who come from similar background & expectations?

>> Find out if the person who claims to be an Advisor/ Financial planner is actually one. Or he is simply a product pusher, using a fancy name. It is fairly easy to find out. A seller of products would start talking about it in the first meeting itself. A proper advisor/ financial planner would be asking you about your goals, finances & situation. They would want detailed information and may involve many meetings. They would want to work on the data before they come up with any suggestions.

>> Find out their story; when and how they came into this line. It will give you insights about them. You will also know about their expertise, experience & how they have progressed.

>> Find out about their qualification, accreditions, professional activities, about what they do to stay current etc.  Would they be registering as Investment Advisors under SEBI regulations, which calls for stringent norms, compliance requirements, audits & record keeping?

>> Do they research/ write/ lecture on their professional  areas?  Are they part of professional groups/study circles to upgrade their knowledge / skills? What is their standing in their area of expertise? This will tell you whether they are qualified professionals to advice you or not.

>> Ask them to show a sample of what they have done for a couple of clients and ask them to explain the same in detail. This will directly tell you what kind of work they do & the detailing they get into.

>> Ask them about the process & flow they follow, once you engage them. Do they document the service engagement, it’s scope & time frame? Who are the people who will offer them the services? Is there a team that will assist you, or is it a one-man army?

>> Is it a one-time advisory or is it an on-going engagement? If there is on-going involvement & engagement, ask them for details. Are all these documented?

>> Find out the charges.  Find out what is the basis for their charge. Ask them to substantiate the value proposition they are offering. Ask them for a comprehensive quote in writing.

>> How much time will it take to get the plan/ advice?  How is it delivered? What are the deliverables?

Once you have asked all these questions, only the true advisor/ financial planner will be left standing. The salesman will fall by the way side after just the first couple of questions. Once, you have satisfied yourself that the person you are dealing with is indeed a true professional, you need to trust the planner/ advisor completely.

Without trust, this relationship is bound to fail. You could always seek answers to all doubts and even seek clarifications/ justifications to any recommendations or suggestions advanced. But, once it has been convincingly handled, you would need to follow the advice. Trying to thrust your agenda into the plan is counterproductive and brings in friction in the relationship.

It is like following a guru. If you follow one guru /one path, you will get somewhere, even salvation. If you don’t trust your guru and do not do half the things he suggests, you will end up nowhere. The same is true here. So, choose your advisor/ financial planner with care; but after that, follow the advice to completely. Hopefully, you will be on your way to financial nirvana!

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