How to choose a financial planner

Financial Planning | admin | June 15, 2011 at 8:29 am

Before you entrust your money to a planner, here are a few things you should know.

Qualification

A certified financial planner who is affiliated with an established organisation is best equipped to give you advice on how to manage your finances. Check out his certification before signing the agreement. Keep in mind, however, that the certification is only an indicator of credibility, not a guarantee for the same.

Reputation

There are enough quacks in this field masquerading as surgeons. If a planner is knowledgeable and good at his work, he will have an impeccable reputation. Find out by asking him for references and speaking to his clients. You should have this feedback before you sign the contract.

Strategy over product

Financial planning is 95% strategy and 5% product choice. The planner should work out the investment and saving strategy and leave the choice of products to the individual. If he starts by offering products, it's best to stay away from him.

Multi-faceted approach

The advice should not be confined to only a particular aspect of your finances. Unlike agents and salespersons at banks, the financial planner should look at all the facets of your financial life, including goals, risk appetite and long-term requirements, as well as tax implications of your investments.

Independent functioning

An adviser working for a financial services company, such as an insurance firm or a bank, might not be able to give you objective advice. A conflict of interest is likely to crop up at some stage. Go for an independent financial adviser who does not have a vested interest in pushing the products of a certain company.

Research and support services

The right advice is backed by adequate research. Your financial adviser should have such capabilities and should have access to the best technology and financial tools to select the appropriate product for you. He should also be clued in to policy changes and the forthcoming changes on the taxation front.

Source: Economic Times