Think about any of your recent vacations across India, or abroad. If you visited any of the famous historical monuments or museums, there is a high probability that you would have felt lost and unsure where to begin and how to go about viewing all that there is to see. Lack of familiarity and information is often the cause for this feeling. This is where ‘guides’ come handy as they know the place inside out and have in-depth knowledge of what is there to take in and enjoy.
The financial landscape too is a similar maze for the common man. It helps to have a ‘guide’ to take you through the choices and their implications. These financial guides are known as financial advisors. They come in many different shapes, sizes and shades. They act as guides and will not only spend time with you to understand your requirements and your goals, but also take you through the many investment products available to help you make the right choices. The different titles that they sport often causes confusion on their nature and scope of service.
Here is an attempt to understand them better.
Different types of Financial Advisors
Financial advisors, as we commonly refer to them, provide guidance and service to the consumer on issues concerning their money matters. Their common nomenclatures and functions are as below:
7 things to look for while selecting a suitable financial advisor
As financial products are intangible and the consequences of the advisor’s recommendations and actions show up years later, you need to be very diligent in picking the right one. Here are some key factors that you need to consider in making an objective evaluation of the advisor:
Qualifications: Is he qualified to offer you the guidance you are looking for? Find out if his qualification is recognized by the regulator and whether he is registered or licensed. He should hold a certified financial planner degree, should have been practicing for a long time and should have a roster of happy long term clients. Similarly, for someone to advise you on mutual funds, he or she must have taken and passed the NISM Mutual Fund Distributors Certification Examination.
Credibility: Knowledge is of little use unless accompanied by integrity, ethics and transparency. Check with your family / friends or read up on the experience of other users on social media sites about the conduct of the advisor.
Scope of services: You need to ensure that the advisor offers the entire spectrum of services that you are looking for. If not, he should at least have the necessary tie-ups with other professionals.
Number of clients: You need to check out how many clients he is presently managing. There is a limit to this as the service involved needs to be personalized.
Team size: This also determines the number of clients that and advisor can service. If he has a large number of clients, his team size should be commensurate.
Accessibility: Ensure that the advisor is easily accessible and has the time to serve you. If he is too busy, no amount of qualification or character is going to help you later.
Knowledgeable and aware: The finance field is very dynamic and any advisor needs to keep himself updated on a continual basis. Check if your advisor gives you contemporary information and advice, on a regular basis, relevant to current market situations. He should be technologically savvy and ideally should have the set up to allow his investors to transact and be serviced electronically. He should also be able to provide you with regular consolidated statements in an easy to understand format.
So now you know how to find yourself a trustworthy and competent financial advisor.
Disclaimer: The information presented is as per current SEBI Regulations governing distributors, which may change from time to time. We recommend that investors speak to their advisors and understand their compensation model, before investing.
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