9 Important Questions to choose a Personal Financial Planner in India

Personal Financial Planner Questions to Ask

Choosing the Right Personal Financial Planner in India can be a task. There are so many nomenclatures and titles used by the financial guys which lead to all this confusion.

Some call themselves consultant, coach, wealth architect, Advisor and what not…

But in Reality, all do the same thing with different names or sometimes, work as sellers in the name of advisors.

Since this is a question of your hard-earned money, you should not fall for the titles and find out if the concerned person is a professional and certified enough to guide you on your Personal financial planning properly.

SEBI has tried to ensure this, by making it mandatory for all Real advisors to Register under the SEBI Investment Advisor Regulation 2013, and further mandated that no individual or corporate can use the word like advisor, consultant, Planner, etc. if they are not registered with SEBI. 

Still, you need to be cautious as many still do not agree with the regulations and try to dodge the Financial Regulator. 

With technological advancement and multiple communication channels, many of the financial planners nowadays offer online financial planning, and you also get in touch with them virtually only, so you have to be sure whom you are dealing with, rather than falling for their profile you see online there are ways to select the Right Online Financial Planner for you too.

List of Questions to ask, before selecting your Personal Financial Planner:

What services do you offer?


Start with understanding the service offerings by the personal financial planner. Here it is important that you should also be clear on what kind of services you are looking for.  

Some planners offer plan-only service i.e. they prepare financial plans and provide only recommendations and the rest you have to take care of, like execution of the advice, investment management, etc.

While some planners offer both financial planning and investment management services.

Now, a word of caution here is that Financial planning itself is a misused term. Many advisors just want to sell the investment products in the name of financial planning.

You should ask them their process and tools they use, if any, to provide such services.

Comprehensive financial planning covers each and every aspect of Financial Management be it- Retirement Planning, Goal-Based Investment Planning, Tax Planning, Estate Planning, Portfolio Management, etc. 

You may not require all, but at least you should know that your financial planner knows planning well and will be helpful in finding the answers to your questions on these topics in future

Make sure that the service offerings suit your needs and add value.

What Credentials /Certifications, and Qualifications do you have?

It is imperative for you to know what education qualification the personal financial planner possesses. 

Although SEBI Registration itself takes care of the basic qualification and regular updation by the advisor, still you should also know this. 

There are specific International accredited certifications like Certified Financial Planner (CFP), which may make you comfortable and confident engaging with the Financial Planner.

However, some others are also there like Chartered Wealth Manager (CWM), or some by NISM (National Institute of Securities Market), many others like such may come up in the future. 

You should ensure that you do not fall in this Alphabet soup, but be clear on the qualifications. 

As there are many “so-called certifications” offered by many Mutual fund houses or some local training agencies, which may not equip the advisor with relevant knowledge. You may search online for the Credentials on the certification too.

In addition, if the planner is providing additional services such as Estate Planning or specific tax planning then the Chartered Trust and Estate Planner (CTEP) certification, Chartered Accountancy (CA) would indicate the area of specialization.

Please note that as per SEBI Regulations, Chartered Accountants (CAs) are not authorized to do Investment Advisory unless their advice is incidental to their primary engagement with the client. CAs can offer investment advice after registering them with SEBI. 

What would be the Fee Structure?


Once you are clear with the service offerings and are satisfied with the credentials, you should know how much the potential personal financial planner is going to charge for his services. 

Depending upon the service offerings, the fee structure may vary. If he is offering plan only service then it could be a flat fee and if investment management service is also offered then he may also charge a certain percentage of assets under management or advisory as the case may be.

Since we are talking about a Personal Financial planner, who is supposed to be SEBI registered and thus must be providing Fee-Only Financial planning, thus it is important for you to know that if the advisor offers you any product with commissions inbuilt, that should be a red flag for you.

Knowledge of fee structure is important but it should not be your primary concern, which otherwise might be, since you may not be habitual on direct fee payments. 

You may be thinking that a low fee is always better, as all financial planners will offer the same kind of services. However, you may also feel that high fee charging advisors are better as they may have more experience and knowledge on the subject. Both of these could be incorrect. Even the opposite of your thoughts may not be true.

There is no Right or wrong fee structure. There are no High or low charges. Practically, every advisor is charging the same. First-year it may be due to the complexity in your data or as per the Value given to the service by the advisor, but when it reaches the Investment Management stage, you will find similarities. 

Is there any Conflict of Interest that I should be aware of?


As per SEBI guidelines, if you are engaging with a Personal financial planner (registered with SEBI), there should not be any conflict of interest.

They need to keep the interest of their clients at the forefront. But still, if there is any conflict, then the financial planner should be transparent enough to disclose it in detail to you.  

If an advisor advises only or majorly on the products of only 1 or 2 companies. If they want you to buy PMS products that may have a high concentration risk, If the adviser sells you some commission-linked insurance policies or other specific products, then there is a conflict of interest. Read more on Portfolio Management Services or PMS in this article.

 What type of clients do you generally work with?


Some personal financial planners work with diverse client profiles be it- working professionals, Business Persons, NRIs, Retired Individuals, etc. while others focus on a particular niche, for instance-  NRIs, Women, Doctors, Special Need Families, etc. 

You may go with the one who specializes in working with people similar to your financial situation, as they might be able to holistically guide you on the particular aspects specific to your needs. 

However, a general physician (Read- financial planner catering to diverse client profiles) could also be better for you than a specialist, so you may have a diverse viewpoint and experiences of different sets of profiles.

To start with it may not matter, as it’s all about how the financial planner keeps himself/herself updated in this ever-changing world.

What is your Investment Philosophy/Process?


It becomes really crucial that you should understand the investment philosophy of the personal financial planner you are going to hire. The investment approach should be simple and commensurate with your risk profile and goals. The financial planner should make sense of these points:

a) The rationale behind the selection or rejection of a particular product or asset class in the portfolio 
b) How well the portfolio be diversified- so that downside risk can be minimized
c) How often the Financial Plan and Investment Portfolio would be reviewed
d) Reasons and frequency for rebalancing the portfolio

One thing which is not in anyone’s control is Returns. If the advisor is telling you that he/she can get you high returns…stay away from him/her.

If the advisor runs a Blog or YouTube channel then you may subscribe to the articles as those write-ups will tell you the thought process with no sales pitch.

Also note that many well-known bloggers or YouTubers are not certified enough to advise, so it may be good to follow them and read them, but take advice at your own risk.

How often do you communicate with your clients and through what mode?


This question would let you know how often the financial planner keeps a touch with the clients and is he open to communication or not. 

Some may prefer frequent meetings while others may choose to communicate over phone or email and hold quarterly, semi-annual or annual review meetings. 

Also, some of them always keep the communication channel open and you may call them up any time with your queries while others stick to the communication schedule only. 

It is important that the communication plan suits you and gives you a sense of comfort. It should not be too much or too little.

In this technology era, most of the communications are happening online. So if the advisor does not meet in person or is not from your city, that it should not bother you. In fact it is better, as online financial planning saves a lot of time.

Will you be the only person or someone from your team who would be working with me?


In the case of Individual financial planners, this question may not be of relevance. But still many individual planners have a support team, to take care of the backend work. In Corporate Structure, the team could be big.

You need to be sure who will be your point of contact, and to whom your plan will be assigned. If it is not the chief planner himself whom you have read and inquired about online, then you should know, how does that financial planner make relevant contributions in the whole exercise. 

Remember, it’s not the Fortis or Max that treats you. It is the doctor working there. So the assigned Personal Financial Planner has to be qualified and experienced enough to do this.

Please be clear on this issue at the forefront and go for the structure you are comfortable with. 

If you are comfortable talking and sharing your money issues with the principal planner himself, individual structure might suit you. If you think the team might handle issues well, corporate structure is the one for you.

How do you measure success with your clients?


This question may tell you the value of a Financial Planner in one’s life. What value addition a Planner can offer you if you engage with him/her. How the financial planner answers this question, might be a deciding point for you. If he focuses only on “high returns”, then it might be a red flag. Some answers to expect from him:

a) Achievement of your financial goals.
b) Your money should give you happiness.
c) So You should have ample time with you to focus on other important things. 
d) Money Life Balance

I did a video on this topic as well, with my friend Sumit Bhandari, you may watch it below:

Bottom Line:

The above list is not an exhaustive one, but it would be a good starting point which would give you confidence to give yourself a start.

The Real understanding of the Personal Financial Planner comes only in the journey. It’s just like arranged Marriage.

Good Financial Planners also have their client selecting criteria, so you both have to accept each other with all the disclosures and transparency to take the relationship forward.

The long-term relationship needs a foundation of Trust, and many times it takes a few years to build one. Anything hidden will create distrust only. So be open to what you expect and let the other party answer with clarity.

Do not decide based only on the fee structure, it’s a question of your Well-being, and money management is an important part of that…You have to do the cost-benefit analysis to select the best for you.    

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