Publication: The Economic Times Mumbai; Date: Jun 25, 2008; Section: Personal Finance; Page: 19
A lot of agents, financial distributors and banks try and call themselves financial planners. They generously also use the term financial planning/wealth management as and when it pleases them. Consumers are confused about the various terminologies used and hence do not actually question what a particular designation means. A person will always go for a Certified Financial Advisor or Certified Senior Financial & Investment Specialist, 95 % of the time, for advice. Incidentally, both these certifications are fake.
First of all, how detailed and comprehensive was the data gathering interview? Did the financial planner make notes of the information that you did not have and ask you to get back with this information. Did he take in information about you , your family, your aspirations, goals , income, expenses, cashflows, assets , liabilities, insurances, investments, powers of attorneys and information that might be relevant. Did he take information about your behavior towards risks and how you react in bullish & bearish situations? Did he understand the mistakes that you have committed in the past and how were they committed?
A good financial planner should take anywhere between 3-5 hours including social chat over 1 or 2 sessions to complete this data gathering process.
Secondly, look closely at how the planner discusses risks and returns with you? Does he promise the moon and tells you how good he is and that he has provided the highest returns. No good financial planner in his right mind will ever do so and this is the kind of person you should look at working with. Does he take you through a proper risk profiling exercise, and tell you that the long-term return of the stock market is around 12% and therefore one should not count too heavily on 30% returns?
Thirdly, don’t opt blindly for the brand because it is the advisor and not the bank that matters. Most of the Relationship Managers in Banks are sales people always on the lookout for selling more and more products to clients.
Fourthly, does the financial planner take you through estate planning matters, retirement planning , different offerings as might be suitable to you and any other issues? He might not deal directly in any of those things but most good planners will at least give you an overview of what you need and refer you to someone competent.
Finally, the composition and presentation of financial plans can vary immensely. The groups most notorious for doing rudimentary financial planning are banks and big distributors of financial products.
The author is the director of My Financial Advisor
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