You are about to hire a Financial Planner, and this will be a very crucial financial decision. Are you prepared? Probably NOT, because most of us just talk without a checklist or a format to the financial planner. The aim is to see if comfort is there or not. Then based on “comfort” you go with the planner. This is not a full proof, complete and scientific way. So we have prepared you a complete checklist, probable questions, answers & details what you should be looking for hiring financial planner.

You’re investing your future with this company and person, so it’s important you choose a right person. Changing a Planner is even worse and stressing then hiring a new person. So you should really know what you are looking for and you are not missing something.

First of all, take time to screen several financial professionals before making a decision on who will invest your money. You can get a list from google search or by references from investors who are availing financial planning services.

This is a 2 part article on hiring financial planner. Part one is a collection of 7 important checks before you hire a financial  planner. Part two (coming soon) is top 6 question and expected answers that you should ask financial planner before saying “I do”.

The 7 Initial Checks of Hiring Financial Planner

There should not be any compromise in these 7 checks.If even a single thing is missing you should not move forward. These 7 most vital checks are:

Qualification

Only 2 qualification holders in India can call themselves as Financial Planners. Only these 2 qualification holders can perform job or practice as a financial planner. These are:

• Registered Financial Advisor (RIA) with SEBI: He is a person who has cleared NISM Level1 & Level2 examination and then has applied for SEBI’s License to practice as a financial advisor. These are highly regulated, audited and practice as code laid by SEBI.
• Certified Financial Planner from FPSB India: These are called CFPs and they follow the steps as laid by Financial Planning Standard Board for developing a financial plan and implementing.

Authentication: You can get a list of CFPs & RIAs by clicking the respective links.

The difference: RIA works only for fees and does not get a commission from any mutual funds or insurance company. CFP has no such restriction. So you will find CFP more than RIAs.

Experience & Reputation

The prospective financial planner must have a working experience of 10 years plus. This is because this is the minimum time required to know about the vast financial industry. The experience should be exclusive from – Personal Finance Industry.

If you check the website of many financial planners – they have “landed” in financial planning and not “chosen” to work. Sorry to say but they have a long list of own career failures, job goof-ups, business bursts and personal breakdowns.

I know, everyone deserves a chance but a person who has a habit of shifting career, stands and then hide it in words is never a passionate person. You need an expert, not a struggler, who may shift focus moment there is a long bear phase. Sorry but I am ruthless on this one.

Strategy on Products

Financial Planning is 95% strategy and 5% products. But many financial planners have “my way or highway” product strategy. They have their own product mix, own allocation for everyone and they work for that “own devised model”. No scope for anything new or old.

They put money in what seem like complicated investments. It’s better to have someone who has a similar philosophy to your own and can explain what they’re doing in a way that makes you comfortable.

Multi-Discipline Approach

Many financial planners work only in their limited domain. The moment you ask them on taxation they will say “it’s not my field”. They will not update themselves nor they think it is their duty to help clients to implement a plan, find a low-cost product, help on taxation, manage change in legal status like a resident to NRI or change in the personal situation.

Many times you need to advise on things which are directly or indirectly related to your portfolio or plan, but your Financial Planner follows a single way approach. This is not a good sign.

Functioning – Independent or Controlled

I know many firms which are run by individuals (brands in financial planning) but running on private equity funding or under corporate umbrellas.

They have leveraged themselves and invested money in building websites, offices and a huge line of staff.

Anyone who has put money will exert pressure on the returns.

If he gets returns, he will try to increase it.

If your financial planner is not independent and answerable for profitability, you need to be cautious. The independence in voice, research & business is a must.

Research

You must see if your Financial Planner invests in research or not. Does he have a research department? Does he invest time in research or he just read 3-4 newspapers and calls it a research?

Research means to have a process to know in-depth information. It not “first to know”. It is “I know it inside- out”.

Does he have tie-ups to outsource which he cannot research like estate planning or international funds or real estate?

Support Services

When I interact with existing clients of banks, they show me swanky reports or login access to portals that give them information.

This is very basic if you see in today’s world. A financial planner should be tech-savvy. Means should be able to respond, provide information, act on portfolio and provide reports on time.

You need to look at the firm, its support staff, it’s approach to communication and their infrastructure commitment to the business.

Professionalism is not a luxury to offer. The buck starts from here.

I end part 1 here. Part 2 will be on 6 Top question to ask and expected answers before hiring financial planner.

Share your views and do forward this article on hiring financial planner to your family and friends.