Skip to main content

Do the Due before You Choose Your Financial Advisor

    THE wealth-management market in India may have a target size of 42 million households by 2012 against just about 13 million in 2007. Indians will have $1 trillion to invest by 2012, with the country's robust economic growth driving a four-fold surge from just about $250 billion in 2007. According to a report by international consultancy firm Celent, India will require many more wealth managers with the number of potential clients and size of manageable wealth both expected to quadruple through 2012.


    According to Wikipedia, a financial advisor is a professional who renders financial services to individuals, businesses and governments. Ideally, the financial advisor helps the client maintain the desired balance of investment income, capital gains and acceptable level of risk by using proper asset allocation. Financial advisors use equity, bonds, mutual funds, real-estate investments and insurance products to meet the needs of their clients.


    The decision on choosing the right advisor with adequate competency, skill and knowledge always rests with the investors. Investors tend to choose an institution that is a better known brand. However, that does not offer any guarantee of better results. A more rational approach is to do a thorough due diligence of the advisor. Ideally an investor should look for the following before on boarding an advisor:


Qualification, Experience & Background: Is your advisor qualified to manage your wealth? Does he have the requisite experience to understand and advise you on various asset classes to optimise returns while managing risks? Right from providing unbiased advice to effectively managing clients' portfolios and making it tide over micro- and macro-adversities, the role of an advisor cannot be undermined for a healthy investor community. Like other professionals — doctors, lawyers and chartered accountants — where fiduciary responsibility goes without saying, financial advisors need to achieve that status, as there is a huge inherent conflict in the product distribution and commission based model.


    Several companies are increasingly focusing on recruiting quality talent from the best business schools, increasing attention on training modules to ensure that the best talent reaches the investor. However, there still is a large skill gap that needs to be filled in order to ensure that the advisor community imbibes the much needed confidence in the investing fraternity.


Systems & Processes: Are the firm's systems and processes in place to safeguard your wealth through appropriate risk management and investment mandate? Following best practices, clear explanation of product features without ambiguity, query resolution turnaround, correct and timely communication of one's holding in various products will be a few important features to look for.


Advisor Incentivisation: How is the advisor earning fees or revenue? This can be very critical to the products being suggested. If he is earning a fee on sales then the psyche will be inclined towards pushing a high-commission product irrespective of the impact it can have on the investor's financial health.


Client References: If the advisor has been suggested by a close friend or a well-wisher and if they are personally satisfied with his/her service, it might be prudent to probe further and engage in a dialogue. If an advisor has contacted you directly, running through a checklist might be helpful in assessing the advisor.


    There can be different filters to assess an advisor. Besides the broad four areas discussed above, here are a few more that could be useful while evaluating an advisor; his or her understanding of your individual needs and requirements, spending enough time with the advisor before you start, appropriate mapping of your risk profile and an asset allocation approach and plan.


    Constant and rational questioning of the advisors presentation may also bring out the truth, as well as bring in a level of comfort in the relationship.


    In more recent times a trend is being seen where large investors are moving into long term partnerships with a single firm through a family office mandate, entering into a fixed fee/advisory model. This in turn helps investors consolidate their entire portfolio across multiple advisors, creating an asset register and an investment-policy statement thereby standardising metrics for measuring performance as well as managing risk.


    This wealth-structuring solution ensures alignment of interest, allowing the advisor to choose any product from the industry, without bias.

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now