How to Choose the Best Financial Advisor

If you are confused about how to choose the best financial advisor, thank Securities Exchange Board of India (SEBI), as it came out with the Investment Adviser regulations in 2013 to regulate the activities of people who called themselves financial advisors.

This regulation was brought in to protect the interest of investors who were taken for a ride by people who were not qualified to provide investment advice. SEBI mandates that compulsory registration for any individual/entity wishing to provide investment advisory services.

The SEBI website website should help you see the list of SEBI Registered Investment Advisers (RIA) in India. This list is exhaustive, but doesn’t differentiate between, fee based and fee only financial planners.

Wealth Crafts is one of very few Fee Only Financial Planner in India, you can book a free consultation call with us to understand our fee only financial planning services.

How to Choose the Best Financial Advisor

In India, you will find everyone calling themselves a financial advisor. Claiming to have helped individuals and even promising to provide greater returns.

SEBI Registered Investment Adviser (RIA)

SEBI is the regulatory authority for financial markets and services in India. SEBI mandates every individual/entity providing financial planning services to be registered with them. You may look up on SEBI’s website for a complete list of SEBI RIAs. Click here to refer to Do’s and Don’t listed by SEBI as part of investor awareness. Always ensure that the entity you deal with is registered with SEBI.

Certified Financial Planner (CFP)

Certified Financial Planner (CFP) – The Financial Planning Standard Board (USA) has been certifying individuals who pass their stringent norms related to personal finance. This certification has worldwide recognition and is considered as the gold standard when it comes to helping individuals manage their finances. You can search for the Best Certified Financial Planners In India on FPSB directory.

Three Types of Financial Planners

Flat Fee Only Financial Advisor

A Fee Only Financial Planner is someone who gets directly compensated by the investor. They charge for the financial plan and advisory services provided to the investor. They do not earn any commissions or brokerage from the products or strategies they recommend. There is no conflict of interest when the planner lists out the action items in a financial plan. They earn no kick backs or under the table payments for anything. These planner are bound by fiduciary responsibility and are mandated by SEBI to keep the best interests of the investors in mind. Read here for 5 Reasons to work with Fee Only Financial Planner

Fee Based Financial Advisor

A Fee Based Financial Planner is someone who charges the investor for planning and might also receives commission from products or strategies recommended in the financial plan. There are twin charges one for planning and one from investments. This is caused of concern as there is scope for potential conflict of interest from the products recommended in the financial plan.

Distributors of Financial Instruments

Distributors are involved in selling various investment instruments. They could be mutual funds, stocks, insurance products or any other financial instrument. Their income is generated from the commission or brokerage that is generated by selling those investments. They are not mandated to ensure fiduciary responsibility and can naturally lead to huge conflicts of interest. Most people fall for their FREE services thinking that they are not paying anything, but fail to realize that the products recommended by them include costs in the form of high commissions. For example, such distributor recommend regular option of mutual funds instead of direct option where there are no commissions involved.

In addition, to all of the above, it is prudent to extensively understand the financial planner’s approach for investment planning. Planner that follow the below 6 step financial planning process are known to provide better value and help their clients achieve financial goals;

Steps followed by The Best Financial Advisor

Type of Advisers you should stay away from;

Recommends Investments Without Risk Profiling

Understanding the risk profile of an investor and assigning the right asset allocation suitable for the unique needs serves as a strong foundation for the financial plan of an individual. If a planner gives out recommendations without proper risk profiling, it is sign of grave danger and it is better to stay away from them.

Assures Guaranteed Returns

Human greed has destroyed more wealth than any other factor and continues to do so. As long as investor fall into the trap of guaranteed returns, you will find con men designing one ponzi scheme after another. It is common to hear one every couple of years. People don’t seem to learn from other people’s mistakes. Stay away from people promising guaranteed returns.

Offers Get Rick Quick Schemes

Creating wealth takes time. Our dreams to get rich quickly makes us to take unnecessary risks. People fall for traps which promise doubling or tripling of investments and end up losing all the hard earned money to crooks. It is important to understand the magic of compounding; a simple monthly investment of ₹ 5,000 can create a corpus of more ₹ 1,00,00,000 if continued for 30 years at 10% pa. Simple disciplined investments are more important than chasing greater returns.

Confuses you with Complicated Instruments

Some investors are satisfied only when the adviser comes with new products and strategies every now and then. They want to invest in new instruments thinking that they are exclusively available only for them. They think that simple products like mutual funds and PPF are not for them. They are given rosy presentations at fancy hotels with 5 course meals without understanding that they are ones sponsoring such gala dinners.

About Wealth Crafts – SEBI Registered Investment Advisor

We are a SEBI registered Investment Advisor and a FLAT Fee-only Financial Planner based in Bangalore India. We provide financial planning services to individuals and help them manage wealth and lead a happy life. We cover all aspects of Personal Finance such as Budgeting, Risk Mitigation, Investment Management, Retirement Planning, Financial Goal Planning, Tax Planning, etc.

In this fast paced world, some of you may find it difficult to dedicate time to gain the required knowledge and skills to actively plan and manage certain financial aspects of your life. You may want help getting started.

A qualified, experienced and regulated Investment Adviser can be of help. Most people end up looking at investments in isolation, without giving due importance to their behavioral elements. We can help you by giving the right perspective to your preferences, life goals, aspirations and help you by creating a Comprehensive Financial Plan which will benefit you in many ways.

How can you contact Wealth Crafts?

We work with clients who stay in Bangalore, Mumbai, Chennai, Kolkata, Delhi or in any part of India and world. Most of our clients prefer online meetings through Zoom meetings, google meet and other online tools. Because now with the advancement of technology, it is now easy to meet and fix a meeting online. Book your free consultation call to understand how we can help you.

Our Fee Structure

Each Individual has a unique situation and needs a unique financial plan. We all go through different phases of life and as we age, our incomes increase and so do the complications around money. We have designed different charges for each category of individual, which are;

Starter Plan – Young Adult

  • Risk Profiling
  • Review of Existing Portfolio
  • Financial Fact Finding
  • Goal Based Financial Planning
  • Investment Strategy
  • Emergency Planning
  • Liquidity Analysis
  • Knowledge Sharing Sessions
  • Unlimited Consultation

Value Plan – Dynamic Family

  • Everything In Starter Plan
  • Risk Mitigation
  • Life/Health/Property Insurance
  • Review of Existing Insurance
  • Asset Allocation Strategy
  • Net Worth Analyses
  • Retirement Planning
  • Half Yearly Review
  • Unlimited Consultation

Premium Plan – Sophisticated Investor

  • Everything In Value Plan
  • Life Centered Financial Planning
  • Tax Loss Harvesting
  • Debt Management
  • Portfolio Re Balancing
  • Household Cash Flow Management
  • Importance of Will & Estate Planning
  • Quarterly Review
  • Unlimited Consultation

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