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How to find the right financial advisor to meet your life goals?

How to find the right financial advisor to meet your life goals?

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A financial advisor provides advice to clients on personal finance and investments. The advisors use their expertise in financial matters and help their clients in meeting financial goals and this includes saving, budgeting, insurance, investments, and tax saving.

The financial advisor plans for their clients to achieve financial goals. They educate the clients on the financial topics that can include budgeting and saving. As the knowledge of the client increases the planner helps further in investments, insurance, and tax planning.

A financial advisor does an analysis of the income of the person, assets, liabilities, and expenses. After doing a thorough analysis and studying the risk tolerance they plan for the financial goals of a person at different life stages and the retirement. Based on the present net worth and expected future income the financial planner will work out various scenarios for the money to last the client’s lifetime.

A person will receive regular updates on the status of their portfolio from the financial planner. The financial planner will conduct a regular meeting with the client to know if any important event is taking in their life as a marriage, divorce, change of job, promotion, etc. The meeting may be conducted once a quarter where the financial planner will note the changes and review the goals and the plans. The meeting may even be held remotely through a video chat.

Models on which the financial advisor works-

Fee-based Model-

In the fee-based model, the financial advisors charge clients based on the assets under management (AUM) or by the hour. The fee depends on the location and the experience of the advisor. Initially, the advisor will offer a free consultation that will make the client, as well as the advisor, know each other; if they can work together and are a good fit.

Commission-based Model-

The advisor may work on a commission-based model which means that they never bill their clients but work on the commission they get for the products they sell to their clients. Here the client may end up with products having higher commission fees as compared to similar products.

Fee and Commission-based model-

These financial advisors work on a combination of fee and commission-based models.

How to find the right financial advisor-

Many people are busy in their professions and aren’t able to devote enough time to managing their investments. The financial success of a person depends on the financial planner and the advice that they receive. It is therefore imperative for a person to select the right financial planner to reach their life goals. The things that a person can keep in mind before selecting the right financial planner are-

  • People generally take references from their family, friends, or office colleagues for a financial planner.  Once you have a few names meet the person to check if they are good enough to give you advice.
  • Opt for a fee-based financial advisor. Many financial planners try to sell products that earn them high commissions. By opting for a fee-based financial advisor you will get the right advice and would be able to keep away from products that give very little return or benefits. The fee could be in the range of 0.5-1% of the assets being managed or the fee could be in the range of Rs.10,000- Rs. 50,000 depending on the location and the experience of the advisor.
  • The financial advisor will be managing your money so it is better to have a few meetings before hiring them. The advisor should be able to understand what you want to achieve from the investments and set the goals accordingly. Avoid financial advisors who talk about one or two products and try to sell them. The main thing that counts is the execution capability of the planner. They should be able to plan for life goals like vacations, children’s education, and retirement.

Day-to-day work of a financial advisor-

A new financial advisor spends half the day developing a referral network and meeting prospects. They try interacting with people to gain clients. The other work may include writing a blog and establishing a digital presence.

Slowly after a few months, the advisors start gaining new clients and businesses. They now have to serve the existing customers. They start answering the customer queries and reviewing the portfolio of the customers. Giving good service at this stage would help them gain more customers as a reference from the existing customers. They also have to do administrative work like updating the client records and looking after compliance with the existing rules. Entering and maintaining data is a slow process and the advisor has to ensure that it fits into their schedule.

The main focus area of the financial advisor is to deliver what they have promised. The ability to convince clients to do the right things adds to their success. They have to build up the relationship.

Last but not least is to keep upgrading on the skills. Many advisors attend seminars to learn new things while others attend online courses to enhance their knowledge. Interacting with other financial advisors also helps to know how to manage things.

If a person desires to become a financial advisor a bachelor’s degree in finance would be a good option. There are financial programs that teach about investment, risk management, and financial planning. If a person wishes to do a job an MBA in finance will provide an edge. Metro cities like Mumbai, Delhi, and Bengaluru have plenty of job opportunities and the person can find jobs in brokerages, investment banks, insurance companies, and wealth management firms. Advisors desiring to be self-employed have to build up their marketing skills and develop relationships with the clients.

It is always better to do thorough due diligence before selecting a financial planner. Be aware of their qualification and the additional certifications that they have. You should agree to their fee structure and find a person whom you find fit to work for the long term and meet your goals and objectives. This can go a long way in ensuring financial success.

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