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| Signing up the right Guy |
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Rattan Chugh
ExpressMoney
How to assess a financial advisor on knowledge, skills and the willingness to give your personal finance goals priority
When Ravi, an MNC executive, met a ‘financial expert’ to help him manage his financial affairs, he was disappointed to learn that the expert was only interested in selling him a very large insurance policy. |
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Haven’t many of us been through Ravi’s experience? We rarely come across someone ready to understand our needs and help us achieve our financial goals. Often, we end up meeting someone who hard-sells products to us.
The reason for this disconnect is the non-convergence of our interests and those of the advisor. While we seek professional advise to manage our finances, the advisor’s top priority is to create wealth for himself from the commissions he earns. So, how do we decide whether or not an advisor we have met is good enough for us? |
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| Choosing A Partner |
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Your advisor should be your partner in achieving your financial goals. He will never assure superlative results, but will help you aim at what is currently beyond your reach and make you work towards it. Use the standard competency model called KASH -- knowledge, attitude, skills and habit – to assess his suitability. |
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Knowledge. Assess the advisor’s expertise in investments, insurance, tax, loans and the like. Is he professionally qualified and certified? Does he keep abreast with changes in the personal finance space? |
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Skills. Check whether the advisor has the right processes and tools to develop a suitable financial plan for you. Are his recommendations supported by research? Has he analysed all aspects -- the tax implications of his recommendation, for instance? Is he manufacturer-neutral or is he a dedicated agent of a particular company? Do you belong to his target client segment? For instance, if his focus is on high net worth individuals and you save Rs. 10,000 a month, you might not get enough attention. |
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Attitude. Assess the way the advisor relates with you. Does he look at you as a customer who can be sold a few products or is he in it for a long-term? Will he spend time to understand your needs before offering recommendations to you? |
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Habit. The advisor should be disciplined and his advice, consistent with the agreed financial plan. He should not be tempted by opportunities that are not in line with your plan. He should be able to explain you every time he adjusts your portfolio and should not be merely churning it. Can you trust him not to abandon when the going gets tough? |
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Don’t get swept away by an advisor’s knowledge. Assess whether you can trust him with your money and whether he will live through the ups and downs to make you win. |
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