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Points to consider before choosing a financial planner

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Points to consider before choosing a financial planner

FINANCIAL planning is a process of achieving one's financial goals and a true financial planner provides guidance and a process for determining the best way to meet important goals of life through the proper management of financial resources. Though the world is full of an endless array of free financial planning information, websites, books and blogs, yet, you need the help of a financial planner. The reason may be that you lack the time to do a lot of research yourself or you feel the need for a professional opinion. But don't rush out and hire just anyone.

Make sure that you receive enough value for the fees you are paying to your financial planner. You should do some research and think about what you need and expect from your financial planner, because, there may still be some wolves in sheep's clothing calling themselves `financial planners'.

Do the following checks before you hire your financial planner. Qualification and experience: The term financial planner is not regulated, and hence, used by many financial professional.


An insurance agent, working in a tied agency channel of an insurer, can also use the term financial planner or financial adviser.

Ask the planner that what qualifies him to offer financial planning advise. There are different types of certifications offered by several bodies such as NCFM, NISM, BCFM, Irda and FPSB India to name few, but not all have the same importance or weight. So, do make sure you know what the certification mean.

Professional status of a financial planner is shaped by the kind of education they have, or the letters behind their names. If your planner is qualified as certified financial planner (CFPCM), it ensures that he has undergone the internationally recognised financial planning curriculum, covering topics such as insurance planning, retirement planning , investment planning and tax and estate planning . Also, find how long the planner has been in practice and his experience in counseling individuals on their financial needs.
Services offered: Its not that all financial planners offer comprehensive financial planning services. It's also not necessary that your financial planner is able to execute all aspect of financial planning, but, the scope and limitation of the financial planner should be disclosed at the start.

If the planner works with professionals outside his own practice such as lawyers, insurance agents or tax practitioners to develop or carry out financial planning recommendations, get their names to check on their backgrounds.


Reference check: Ask for references of present clients. Ask if any regulator or professional standards setting body like FPSB India has initiated any investigation against him. Google some information about your financial planner.


Financial planning approach: Ask the financial planner about the type of clients and financial situations he typically likes to work with. Some planners prefers to work with high networth individuals (HNIs), other may like to work with salaried individuals. Some financial planner may require you to have a certain net-worth before offering services.
Does he exhibit a strong willingness to understand what goals you have set out, and has he thoroughly explained the intended approach to reaching these goals?
Find out if the planner will only develop the plan for your or also help you in execution of the plan. Check that how frequent your financial plan will be reviewed. Ensure that your planner is not a product-driven salesman and has a client-centric approach.
Resources: Some financial planners work in team in their financial planning firm, while others may provide personalised advice. If your financial planner has many clients, it is very difficult to maintain personal relationships with everyone. Many smaller clients can easily get ignored or may not be able to get personal attention.


Make sure that there are sufficient number of planners in the firm to provide appropriate service to the clients.


Research and support: The right advice is backed by adequate research. Your financial adviser should have such capabilities and access to the best technology and financial tools to select the appropriate product for you.


There are frequent changes in regulations and policies. Make sure that your financial planner keeps him updated with such changes.


Fee structure: Financial planners may follow different compensation models.
Some may charge a lump sum fee for making your financial plan, while others may charge fee based on your asset managed by him. Few even may charge both if the financial plan is executed by them.

Typically, the financial planner who has been around for a long time with a good track record will cost more than the new graduates with little experience.


Conclusion: Deciding on the right financial planner is an important step to ensure your financial well being. It requires you to do some research and shopping around before finalising on your financial planner because a bad decision on a financial planner can be a long-term burden in more ways than one. 
 

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