Q. I am Sameer from Chandigarh. My wife and I have been too busy with our careers to focus on our retirement plan. What factors should we consider when selecting a financial advisor who can help us with personalised guidance?
It happens to many of us, Sameer. We get too busy with our job, profession, or business that we forget we must start planning today for the day when we retire, and that income flow will cease. You are right to consider the services of a financial advisor to help you with your retirement planning. Here are some tips to choose the right financial advisor.
Qualifications and credentials
Look for advisors who hold relevant qualifications and SEBI-compliant certifications—like a Certified Financial Planner (CFP), a Chartered Financial Analyst (CFA), or a Certified Public Accountant (CPA). When you engage such a professional you can expect a higher level of expertise and greater commitment to ethical standards.
The advisor must have a valid, current SEBI registration.
Look for an advisor who offers demonstrable experience in retirement planning and in working with clients whose profiles match yours. An advisor who has guided clients through different life stages and helped them navigate various market conditions can provide valuable insights.
Pick a fiduciary advisor who is legally bound to act in your best interest and prioritise your financial well-being over their own profits.
Services on offer
Ensure that the advisor offers the services you need and are likely to need in the future—retirement planning, investment management, tax planning, estate planning, or a combination of these. A comprehensive approach will take care of all aspects of your financial wellbeing.
Passive advisors mimic market indices for low-cost returns, while active advisors seek higher returns through stock selection. Value advisors target undervalued assets, growth advisors prioritise high-growth companies, and income advisors focus on steady income sources. You must understand their investment philosophy and it must be aligned to your goals.
Clear and open communication is crucial. You should feel comfortable discussing your financial goals and concerns with the advisor. They should be able to explain complex concepts in a way that you can understand.
Understand how the advisor charges fees for the service. The fees may be based on the value of the assets under management, or an hourly rate, or a flat fee. Make sure the mode and the quantum of fees are commensurate with the value you expect to receive.
References and reviews
Ask for references or read online client reviews of the advisor. That will give you a good idea of the professional’s reputation.
Avoid advisors who provide generic advice that is blind to your personal needs. You are best served by an advisor who will tailor their recommendations to your financial situation, specific goals, and risk tolerance.
Technology and tools
An advisor who uses modern tools and technology to design and execute the financial plan will be able to streamline the process and provide better insights.
Ensure the advisor is accessible and responsive when you have questions or concerns. Regular check-ins and reviews are important for keeping your retirement plan on track.
Schedule an initial consultation with potential advisors before you sign up. This meeting will allow you to gauge their understanding of your needs and their ability to provide appropriate guidance. Do a little financial homework beforehand to make the meeting more productive. Calculate your average monthly expenses, your specific goals before and after retirement, outstanding debts and the total value of the assets you own.