TomorrowMakers

Choosing a financial advisor should be done with the same care that you take while choosing a doctor.

6 Tips to choose the right financial advisor

It would be an oversimplification to classify women as a different demographic when it comes to money management. Still, each person has a different financial journey. Women don’t require a different approach to investing from men, but they do want a different experience. 

Choosing a wealth manager requires you to find someone who can balance both professional and people skills. Here are six fundamental aspects you should consider before you sign on a financial advisor.

1. Verify their credentials

The first thing you need to ensure is that the advisor has the requisite credentials and qualifications. They should be registered with SEBI as a Registered Investment Advisor (RIA). Though it’s not mandatory to have a Certified Financial Planner degree to operate as a financial professional in India, it is good to know that the critical advice is coming to you from someone who has the knowledge and expertise.

2. Look for someone with experience

Choose a financial advisor who has witnessed a few market cycles and has honed their skills over time – ideally someone who has at least five years of experience in the advisory business. An experienced financial planner will be in a better position to assess the risk-reward potential of different asset classes, quicker to adapt to changing economic scenarios, and be able to construct a resilient portfolio for long-term growth.


Related: Important financial reviews and when to conduct them

3. Opt for a fiduciary

A fiduciary is a professional who charges you a direct fee for the advisory services or a small percentage of gains if they also undertake investment management on your behalf. They do not earn any commissions or brokerage from the financial products they recommend. This ensures that there’s no conflict of interest, and the advisor is committed to your success.

4. Prioritise trust and communication

Financial freedom could mean different things. For some women, it may be more flexible while juggling their career and family; for others, it may be the first step towards independence after a divorce. It is important that you select a financial advisor whom you can freely talk to and share your financial concerns and goals. Have a couple of meetings or conversations to gauge whether the financial advisor is really listening to you and is aware of your expectations and thought process rather than just dishing out cookie-cutter financial advice.

5. Consider the entire service bouquet

Women prefer goal-based planning over wealth-centric planning. This means you are looking for an advisor who can offer holistic financial planning services and not just advice limited to investments. You need someone who can help you cover different aspects of money management – budgeting, getting adequate health and life insurance, setting up an emergency fund, securing or managing debt to tax optimisation and estate planning, among other financial goals.


Related: Why and when you should take your own financial decisions?

6. Don’t hesitate to ask questions

In addition to the parameters mentioned above, feel free to ask as many questions as necessary to allay your concerns. What is the typical profile of the client the advisor handles? What are their personal and professional aspirations? What is their total asset under management? Do they operate individually or have a team? What happens if they are unavailable for some reason? Can they explain different financial planning strategies they implemented on account of the pandemic? Can they offer references?

Choosing the right financial advisor is akin to bringing on board a ‘money doctor’ who will also be privy to a lot of personal and financial information. It is a relationship built on good faith and likely to continue for the foreseeable future. You need to be absolutely sure before you entrust your money to them. Besides, look at these 8 things to know before choosing a financial planner.

It would be an oversimplification to classify women as a different demographic when it comes to money management. Still, each person has a different financial journey. Women don’t require a different approach to investing from men, but they do want a different experience. 

Choosing a wealth manager requires you to find someone who can balance both professional and people skills. Here are six fundamental aspects you should consider before you sign on a financial advisor.

1. Verify their credentials

The first thing you need to ensure is that the advisor has the requisite credentials and qualifications. They should be registered with SEBI as a Registered Investment Advisor (RIA). Though it’s not mandatory to have a Certified Financial Planner degree to operate as a financial professional in India, it is good to know that the critical advice is coming to you from someone who has the knowledge and expertise.

2. Look for someone with experience

Choose a financial advisor who has witnessed a few market cycles and has honed their skills over time – ideally someone who has at least five years of experience in the advisory business. An experienced financial planner will be in a better position to assess the risk-reward potential of different asset classes, quicker to adapt to changing economic scenarios, and be able to construct a resilient portfolio for long-term growth.


Related: Important financial reviews and when to conduct them

3. Opt for a fiduciary

A fiduciary is a professional who charges you a direct fee for the advisory services or a small percentage of gains if they also undertake investment management on your behalf. They do not earn any commissions or brokerage from the financial products they recommend. This ensures that there’s no conflict of interest, and the advisor is committed to your success.

4. Prioritise trust and communication

Financial freedom could mean different things. For some women, it may be more flexible while juggling their career and family; for others, it may be the first step towards independence after a divorce. It is important that you select a financial advisor whom you can freely talk to and share your financial concerns and goals. Have a couple of meetings or conversations to gauge whether the financial advisor is really listening to you and is aware of your expectations and thought process rather than just dishing out cookie-cutter financial advice.

5. Consider the entire service bouquet

Women prefer goal-based planning over wealth-centric planning. This means you are looking for an advisor who can offer holistic financial planning services and not just advice limited to investments. You need someone who can help you cover different aspects of money management – budgeting, getting adequate health and life insurance, setting up an emergency fund, securing or managing debt to tax optimisation and estate planning, among other financial goals.


Related: Why and when you should take your own financial decisions?

6. Don’t hesitate to ask questions

In addition to the parameters mentioned above, feel free to ask as many questions as necessary to allay your concerns. What is the typical profile of the client the advisor handles? What are their personal and professional aspirations? What is their total asset under management? Do they operate individually or have a team? What happens if they are unavailable for some reason? Can they explain different financial planning strategies they implemented on account of the pandemic? Can they offer references?

Choosing the right financial advisor is akin to bringing on board a ‘money doctor’ who will also be privy to a lot of personal and financial information. It is a relationship built on good faith and likely to continue for the foreseeable future. You need to be absolutely sure before you entrust your money to them. Besides, look at these 8 things to know before choosing a financial planner.