Finding a good financial advisor is always a big challenge. But once you find that advisor, keeping that trusted advisor, who is like your personal chief financial officer (CFO), requires you to take seven vows, much like the saat phere one takes at his/her wedding!
Just like how one goes to the same doctor or even to the same hairstylist, one needs to stick with the same dependable financial advisor, simply to ensure that their money is well taken care of.
But there are certain behavioural traits that could affect your relationship with your financial advisor.
Not disclosing all information
You should disclose all relevant information to your advisor to allow him or her to provide proper assistance.
Further, clients tend to split their investments among many advisors but expect the right advise. This is unreasonable considering the advisor does not have the full data required to do so. Clients have a tendency to pit one advisor against the other which finally does not work in their favour.
Not allowing them to devise financial plans
You should not deal with an advisor just on a transactional basis rather engage them for goal planning. Good advisors are better used for creating financial plans and may not be the right fit of you if you only want to use them for picking stocks.
Chiding advisor for every drop in portfolio
Avoid getting perturbed by daily volatility/events and question the advisor on why he/she did not see it coming. An advisor can only guide you on your investments but cannot be blamed for markets falling.
Following advice of media/friend
You should avoid investing based on financial media or what a friend/colleague has invested in. Follow investment gurus on social media but remember their risk profile and goals differ from yours.
Just because you have an MBA finance or Chartered Accountant in the family, don’t allow them to tell the advisor what to do. They have not managed money earlier and may not understand the nuances of doing so.
Old is not always boring, new is not always sexy
It is not prudent to invest in something new each time instead of sticking to the allocations decided. Old is boring, new is sexy applies to fashion, not to investments. Most new investments are old wine in new bottle.
Running after exotic products
Avoid putting down the advisor for recommending simple, boring products. So many financial advisors have mentioned how frustrated they feel when clients put them down for advising simple mutual funds instead of exotic products. And how they are judged to be poor advisors just because they don’t advise investment into current favoured investments like angel investments in startups.
Not paying for advice
Do not appreciate paying fee to advisors. It is well known that Asians hate paying fees for financial advice, while they are willing to pay for every other service for their betterment.
Clients are willing to pay an interior decorator, fashion designer, wedding planner, personal trainer etc. but when it comes to managing money, clients always crib about the fees and are known to switch advisors for a small difference in fees or even manage money themselves.
Further, don’t squeeze the advisor to extract extra services – you don’t do this to your personal trainer, don’t do it to your money trainer.
While an advisor's recommendations will have a direct impact on your wealth, they also sell you something intangible - value. The value of being a lifelong companion in your wealth creation journey.(The writer is Financial Educator & Money Mentor and Founder of Finsafe. Views expressed are personal.)