How to review a financial planner?
Unlike a hotel or restaurant services, experience of financial planning is significantly different. It is therefore imperative that when one looks at reviews on financial planners, they have to be significantly different that a restaurant review on Zomato or a hotel review on a travel portal.
Also, one needs to have a significant research done before hiring a financial planner. While, we have written distinctly on how to hire a financial planner in – What kind of financial planner do I need to hire , here are a few more credential checks that you must take into account when it comes to review on financial planner or review of financial planning services offered by your advisor,
Qualification of the financial planner / advisor – While many of us tend to believe that a Chartered Accountant is actually a financial planner, the reality is financial planning is a distinctly separate discipline. Chartered Financial Planner (CFP) or Chartered Financial Analysts (CFA) are two important qualifications for an advisor / planner to actually give you a sound advice. You can look up the name of the financial planner in the enclosed list of CFPs and list of CFAs for confirmation. Please hire a qualified advisor preferably with the above qualifications. However, the exception could be for those who have more than 15 years of servicing clients and have actual experience of tracking financial markets with the above credentials.
Regulations: It’s always better to prefer a financial planner who has registered oneself with a regulatory body like SEBI. Unlike in the western countries, India doesn’t have mandatory regulations and rules for advisory services. However, each of the regulatory bodies for Insurance, pension and investment advisory offer a list of advisors registered with them. You can find the list as under for each of the areas. Please check if the advisor you are considering is neither blacklisted or barred from business by any of the following regulatory bodies in India.
However, there is no single regulatory body that offers a list of financial planning advisory services in India. ArthaSarathi however, offers you a listing of all financial planners which can help you choose the planner that you need. You can read reviews on financial planners and reviews on financial planning services on a separate section on this site.
Fee structure: It’s very important criterion how a financial planner would charge you for his / her services. When it comes to review of a financial planner, the following two things are very important
Fee only Financial Planners: They charge you fee for the advice offered by them and don’t insist that the financial products are bought from them. Since their earning is not linked to the commission, they earn from the products purchased by you, you can be assured of unbiased advice, provided you are willing to pay pure advisory fees.
Non-Fee only financial planners – They don’t charge you for their advice but earn commissions from the products that purchased by you. They may offer you a bouquet of additional services which enable you to purchase products through them. This is a full-service model where the advisor earns from commissions paid to them.
When it comes to a review on a financial planner or review on financial planning services, the following two factors are very important
Assets under management & no of clients serviced along with References and Testimonials – This is one of the most important features that helps you to review a financial planner. However, it’s difficult to get reliable reviews and also, financial planning is a highly subjective exercise which makes it difficult to make the best out of a referrer. Yet, your financial planning experience must take into account the references.
Ideally, when one looks at reviews on financial planning services or reviews on financial planners, the following factors should distinctly be discussed by the person who is giving you the reference. Please clarify, the following from the person who is offering you a review of his / her financial planning experience
To what extent did you feel that your financial planner allowed a free and frank atmosphere while dealing with you and helped you to take informed transactional decisions and for this purpose?
To what extent, did you feel that your financial planner kept your interest in the forefront;
To what extent, did the financial planner gave you knowledge and understanding of various terms, jargons used in the financial market.
To what extent did you feel that your interaction was on utmost good faith and fair market practices?
If answer to all the above questions are affirmative, then you definitely have a reason to consider availing the services of the financial planner. However, please do consider the following as the most important parameter before you make a final decision.
Was there any performance or return guarantee committed?
Please note that it is very difficult to offer any performance or return guarantee for your investments. Your financial planner is expected to make this very clear to you during your discussions. As per regulatory guidelines, offering any kind of guaranteed returns in market linked plans is a breach of regulatory guideline.
It would be prudent to stay away from the advisors who indulge into above practices.
The above-mentioned due diligence can help you to prepare well for your visit or appointment with the financial planner. You must however, be prepared for your meeting.
For your benefit, ArthaSarathi has prudently listed financial planners and also created a comprehensive review mechanism for our existing customers and listed advisors. You may know more by visiting the links mentioned in this Blog.