How to Choose a Financial Advisor

A financial advisor is an expert who can help you plan your finances accurately, thereby enabling you to realize your financial goals and objectives. Yet, choosing the financial advisor that’s right for you can get quite challenging due to the sheer number of financial advisors out there.

In such a situation, how do you go about selecting the best financial advisors help you in your journey? If this is the dilemma you’re facing, here are some pointers that can help you make the right decision.

• Determine The Area Where You Need Expert Advisory

  It can get quite hard for you to choose an advisor without knowing what you want from them. So, before you go about searching for the best investment advisors, it is essential to first analyze and determine the area in which you need expert advisory. You can start off by listing out all your financial goals, objectives, and the timeframe within which you plan to satisfy them.

  Once you’ve done that, the next logical step would be to highlight the areas where you need help. For instance, you might require some expert assistance with retirement planning, insurance investments, or even tax planning. Only upon finalizing your requirements should you start your search for the best financial advisors.

• Get To Know The Various Types Of Financial Advisors

  Not all financial advisors are the same or offer the same services. In fact, there are plenty of different types of financial advisors, with each one specializing in a specific set of services. For instance, these are the three primary types of financial advisors –

  Traditional financial advisors: These financial advisors offer their services in person and are typically well experienced when it comes to handling complex financial situations. Hiring a good traditional financial advisor can get you the help you need in conventional areas of personal finance.

  Online financial advisors: These advisors offer virtual consultations and will work with you to create a complete financial plan. The services provided by these advisors are typically less expensive than those of traditional financial advisors.

  Robo-advisors: Driven completely through Artificial Intelligence, robo-advisors are essentially highly sophisticated computer algorithms that can help you construct an investment portfolio in accordance with your needs, requirements, and risk appetites. However, robo-advisors may not be in a position to handle complex financial situations like a traditional financial advisor. That said, the services provided by robo-advisors are very cost-effective.

• List Out The Services That You Wish To Avail From An Advisor

  • Investment Planning: Help in formulating a portfolio investment plan that accommodates risks and the individual and market’s financial targets.
  • Retirement Planning: Policies on how individuals can prepare to have adequate money when they retire hence would be an important topic here, which include pension plans and systematic savings.
  • Tax Planning: Reducing taxes by employing legal tax deductions, excluding tax-exempted income and having proper tax-saving investments.
  • Wealth Management: Choosing, acquiring, overseeing and improving financial capital by identifying hazards, mitigation and investment in different securities.
  • Estate Planning: Help with legal advice in writing up wills, trusts, and other issues of wealth distribution to heirs effectively.
  • Insurance Planning: Assessing and advising the insurance solutions for life, health, and property risks.
  • Debt Management: Guidance on the right way to approach the repayment of loans, loan management through consolidation and reduction of the interest charges.
  • Goal-Based Financial Planning: In preparing the budget, and designing plans for most of our major events like purchasing a house, children’s education, or weddings, among others.

• Take The Fee Structure And Your Budget Into Account

• Earlier, the charges that financial advisors levied used to be a percentage of the assets that were being managed. But in more recent times, the fee structure of advisors has changed from being a percentage to a flat-rate fee. And so, it is essential to first decide upon the fee structure that you’re comfortable with before moving onto the next step, since it can give you some much needed clarity on the type of financial advisor that you’re looking for.
• And when it comes to choosing the best investment advisors, the cost is always a hugely important factor that you should consider. Therefore, it is a good idea to have a sort of a budget in mind before finalizing a financial advisor. This way, you can ensure that you receive the best services without overspending for any of them.
• For instance, it doesn’t make any sense opting for a traditional financial advisor, whose costs are typically more than an online financial advisor, if you’re only going to opt for a couple of services.

You might also like Financial Advisor Fees and Costs in India

Conclusion

Once you’ve narrowed down your choices using these four factors, all that you have to do next is assess the financial advisor’s credentials. The best way to do that is to check the qualifications of the advisor and to look up for reviews online. This can give you a better idea of how the financial advisor works and whether he would be in a position to help you out. Alternatively, you can also come up with a set of questions on your own to analyze and determine the capability of the advisor before opting for one. Always remember, the best investment advisors are the ones who have your best interests at heart. You can reach out to reputed franchises like IIFL Partners or their sub-brokers for the same