Select a Suitable Financial Adviser

Qualified and Credentials- There are a dime a dozen of these financial advisors on the market. It is difficult for investors to find the right person for the job. An investor should look for a Securities and Exchange Board of India (SEBI), registered investment advisor (RIA). A certified financial planner (CFPCM) is a mark of excellence that is granted to those who have met the strict standards of education, examinations, experience, ethics, and professionalism. Agents can only sell products from a limited number of companies since they represent a small number of companies. SEBI, the Market Regulator, feels that segregating advice and distribution is necessary and is making progress in this direction. SEBI is implementing regulatory norms such as the removal of upfront commissions for agents, the elimination of fee-based financial advisory services, and the termination trail commission-based distribution agents. This will protect investors from commission-driven agents that offer biased advice in order to earn maximum commission.

Experience and reputation – Any graduate with at least five years of experience in the financial industry or in finance-related subjects can apply to SEBI to register as an investment advisor. Investors should look for advisors with at least five years of experience and a strong market reputation.

ALSO READ  Best cheap car insurance in Irving

Client Base and Assets Under Management – The investor should choose a financial advisor based upon his client base. Investors who are high net worth should seek out advisors that deal with HNIs. Investors who are medium to low net worth should search for advisors whose majority clients have equal financial status. This will help ensure that the client receives the best possible service and plans. To gauge the market position of the client, it is prudent to determine the AUM of his financial advisor.

Referrals and trust – A friend or relative can refer you to the right financial advisor. There are many portals online that you can choose from, but it is hard to know if they are trustworthy and will provide the best service before you put your money through them. Trust is the most important element of a client relationship. This takes time. It is best to start small with a financial advisor, and then to evaluate his service, returns, and ethics. Your next investment may be larger if you are satisfied. Before making any significant investment, it is wise to allow yourself at least two to three years to get to know your financial advisor. Advisor-client trust is tested in financial crisis. According to the third CFA Institute investor study, 83% believe that their advisors are ready to handle the next crisis. This compares with 55% globally.

ALSO READ  Best cheap car insurance in Vancouver

Pay Attention to These Aspects

Vested Interests – Financial advisors may be persuaded by NBFCs or mutual fund houses to sell their products. They offer additional gratifications. He may also be pressured to achieve their financial goals. The advisor may try to sell financial products that are not suitable for the investor, creating a conflict of interests.

The promise of excessive returns – Equity returns range from 12 to 15%. Equity markets investment is subject to market risk. Investors must be aware that both returns and risk are proportional. Investing in promises of insanely high returns of 25-35% is an unnecessary risk. DIY Investors – DIY investors must be aware of the many pitfalls. He will need to be able to navigate the maze of information and make the right documentation.