Is Your Financial Advisor Right for You?

Here are some key tests that can help you evaluate your advisor and assess the reliability of the investment planning counsel they provide:

• They conduct a rigorous fact-finding analysis
  Every financial portfolio should start with a fact-finding analysis, an important goal-based financial planning tool that analyses your present finances to identify your financial planning needs and accordingly devise a suitable portfolio. The right advisor would conduct a thorough fact-finding analysis and help you create a portfolio around your financial goals, time horizon, risk appetite, and investment planning strategies.
  
  
• They explore all investment options – even the ones they don’t sell
  A good advisor reviews all the investment options available in the market and then offers those that match your needs. Matching the right product to your goals is essential, whether the advisor sells that product or not. If your advisor has not explored all the possible options and only suggests whatever seems to pay the biggest commission, the advisor may not have done their due diligence.
  
  
• They keep you updated on the risks and charges involved
  Every investment has its own set of risks that you need to understand, so that you can give informed consent. Your risk profile should match the risks involved with the investment, and it is the advisor's job to help you assess your risk profile and match investments with it.

• They are always there for you
  With the right investment planning advisor, the lines of communication are always open. You can approach them anytime to discuss your investment fears and doubts. Objections should be handled professionally to allay your misconceptions and fears.
  
  
• They are transparent about their earnings
  Financial advisors might get a commission on the products that they sell. They might also charge a fee for their investment planning services. If a fee is charged, you should know the cost of the financial advice that you are getting. Similarly, if commissions are involved, and your advisor is open about the same, it is a good sign. This fosters trust between your advisor and you.
  
  
• They offer post-sales service
  Post-sales service is very important in judging an advisor. While investment planning advisors are usually proactive when selling a new product, post-sales investment and planning services are an advisor's litmus test. If the advisor vanishes or minimises contact post-sales, you should look for other professionals who can provide seamless post-sales service.
  
  
• They conduct regular review and portfolio rebalancing
  Investing is not a one-time affair. It needs continuous monitoring, review and re-shuffling. Maintaining an effective portfolio means adding new avenues or letting go of underperforming ones. Moreover, the portfolio's performance needs to be assessed regularly to ensure that it is on track to help you achieve your financial goals and matches your risk appetite. A good financial advisor helps you review and rebalance your portfolio periodically so that you can make the changes required.
  
  
• The ultimate test – performance review
  This is the best way to judge a financial advisor. Comparing the returns generated by your portfolio with its relevant benchmarks can help you evaluate if your corpus has grown as per your expectations. Year-on-year returns are another benchmark that can help you assess how your portfolio has performed.

A good financial advisor can be a priceless partner in your financial journey – but it is important to verify that you are not being taken for a ride. Evaluate your adviser against these metrics to ensure they are deserving of the confidence you place in them.