Six ways to pick a financial planner
1. Understand your need: It is necessary to understand the need for approaching a financial planner. Clients should be clear about the financial goals that they need to achieve, as well as the specified areas to get expertise. Financial planning these days is no longer about fulfilling the present needs, but foreseeing the future and saving accordingly. Here arises the significance of a financial planner.
2. Ensure the credibility of your financial planner: It is advisable to cross-check whether your financial planner is licensed, credible and qualified to chart out a comprehensive financial plan that satisfies your needs. Your financial planner should be a certified financial planner (CFP) professional or CFP practitioner, CPA- PFS (certified public accountant - personal finance specialist) or a chartered financial consultant. A CPA would be good enough to deal with tax-related issues. "A financial advisor differs from a financial planner. A financial planner is registered with Financial Planning Standard Board (FPSB) India. Planners who practice under the label of CFP are competent enough to provide a broad range of financial advises and most importantly should not be agents of any products in disguise," said Rajesh Bhojani, chief executive officer, International College, Mumbai.
3. Chose an experienced CFP: One of the most important characteristic to check is the number of years he has spent managing other people's money. It is not necessary to judge him on the basis of returns, but he should be clear about the investing fundamentals and must have good knowledge about financial products that would suit one's profile. He should have the ability to forecast the needs and take calculated risks for his client, depending on his source of income and job profile. Hence, its important to know his background and credits so that you are satisfied about your money being in safe hands. According to Suresh Sadagopan, who runs Ladder 7 Financial Advisories, " it is better to talk to friends, relatives or anyone who is trustworthy for reference while choosing your financial planner. Qualification, experience and expertise matter a lot."
4. Check the pay structure: Financial planners are paid either through commission, flat rate or fees, depending on the assets or amount of work. Payment through commission means when one purchases an investment through the financial planner, some amount will be deducted from the total purchase amount and it will go directly to the planner. But one should make sure that the planner is not pushing any particular product where they get maximum commission. Under flat fees payment, they charge for charting out a comprehensive financial plan or getting an expertise in the specified area. Fees based on assets are popular ones, wherein you may pay according to the percentage of assets you invest with them.
5. Track his expertise: While choosing a CFP, it is important an investor finds what suits his needs. For instance, a person having a portfolio worth crores can afford a wealth advisor, whereas a common man may not, because the risk appetite and products suggested would differ. Selecting a CFP also depends on the fees and commissions they charge. Some CFPs hold expertise in equity, debt, real estate, or other alternative avenues such as wines and art, so money should be kept to manage only accordingly.
6. Go for a written agreement: It is always better when sensitive issues such as money matters get a legal backing. Always get an agreement in place by an authorised person, who can help you if the CFP indulges in any fraudulent activity. Even if you have faith, one must give equal importance in getting things on paper. The document must mention the services that will be rendered, commissions and fees charged, including the profit break up and loss sharing if any.
1. Understand your need: It is necessary to understand the need for approaching a financial planner. Clients should be clear about the financial goals that they need to achieve, as well as the specified areas to get expertise. Financial planning these days is no longer about fulfilling the present needs, but foreseeing the future and saving accordingly. Here arises the significance of a financial planner.
2. Ensure the credibility of your financial planner: It is advisable to cross-check whether your financial planner is licensed, credible and qualified to chart out a comprehensive financial plan that satisfies your needs. Your financial planner should be a certified financial planner (CFP) professional or CFP practitioner, CPA- PFS (certified public accountant - personal finance specialist) or a chartered financial consultant. A CPA would be good enough to deal with tax-related issues. "A financial advisor differs from a financial planner. A financial planner is registered with Financial Planning Standard Board (FPSB) India. Planners who practice under the label of CFP are competent enough to provide a broad range of financial advises and most importantly should not be agents of any products in disguise," said Rajesh Bhojani, chief executive officer, International College, Mumbai.
3. Chose an experienced CFP: One of the most important characteristic to check is the number of years he has spent managing other people's money. It is not necessary to judge him on the basis of returns, but he should be clear about the investing fundamentals and must have good knowledge about financial products that would suit one's profile. He should have the ability to forecast the needs and take calculated risks for his client, depending on his source of income and job profile. Hence, its important to know his background and credits so that you are satisfied about your money being in safe hands. According to Suresh Sadagopan, who runs Ladder 7 Financial Advisories, " it is better to talk to friends, relatives or anyone who is trustworthy for reference while choosing your financial planner. Qualification, experience and expertise matter a lot."
4. Check the pay structure: Financial planners are paid either through commission, flat rate or fees, depending on the assets or amount of work. Payment through commission means when one purchases an investment through the financial planner, some amount will be deducted from the total purchase amount and it will go directly to the planner. But one should make sure that the planner is not pushing any particular product where they get maximum commission. Under flat fees payment, they charge for charting out a comprehensive financial plan or getting an expertise in the specified area. Fees based on assets are popular ones, wherein you may pay according to the percentage of assets you invest with them.
5. Track his expertise: While choosing a CFP, it is important an investor finds what suits his needs. For instance, a person having a portfolio worth crores can afford a wealth advisor, whereas a common man may not, because the risk appetite and products suggested would differ. Selecting a CFP also depends on the fees and commissions they charge. Some CFPs hold expertise in equity, debt, real estate, or other alternative avenues such as wines and art, so money should be kept to manage only accordingly.
6. Go for a written agreement: It is always better when sensitive issues such as money matters get a legal backing. Always get an agreement in place by an authorised person, who can help you if the CFP indulges in any fraudulent activity. Even if you have faith, one must give equal importance in getting things on paper. The document must mention the services that will be rendered, commissions and fees charged, including the profit break up and loss sharing if any.
I am planning to move out for my first time and I would like to know about how much do I need to have saved in order to live without worrying?
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