Ask a Financial Advisor these 5 questions before the engagement

 Just as you go to a doctor when you fall ill or you go to a lawyer when you need legal guidance, you may engage a Financial Advisor if you need financial advice. Before you start working with a Financial Advisor, you need to know what questions you need to ask a Financial Advisor. This will lead you to identify a professional that suits your requirements.

Even before you set up the first meeting with any Financial Advisor, you need to ask yourself a fundamental question, “Why do I need a Financial Advisor?”

This is an engagement where the Financial Planner and you (the Client) mutually agree to work with each other.

As a Certified Financial Planner in Kolkata, I hold that there shouldn’t be an expectations gap between the Financial Advisor and the Client. The Financial Planner needs to acknowledge what you are expecting from him/her. Likewise, you need to understand what the Financial Planner is expecting from you as a Client. You must be wondering why I am highlighting this aspect here. It’s from expectations the engagement may turn bitter.

A professional in the field of personal finance can call oneself a Financial Advisor only when he/she is registered with The Securities and Exchange Board of India (SEBI) as an Investment Adviser. Thus, it is a pre-requisite that a professional must be a SEBI Registered Investment Adviser to function as your Advisor in the personal finance space.

Here are a few fundamental questions you need to ask a Financial Advisor:

What Are Your Qualifications and Experience?

Ask about their educational background, certifications (e.g., CFP, CFA), and the length of time they've been in the financial industry. Make sure their expertise matches your specific financial goals.

How Do You Get Compensated?

Understand the advisor's fee structure. Some advisors charge a flat fee, hourly rates, or a percentage of assets under management (AUM). Knowing their compensation model helps you avoid potential conflicts of interest.

What Is Your Investment Philosophy?

Inquire about their investment approach and philosophy. Some advisors may focus on active management, while others prefer a passive or index-based strategy. Ensure their philosophy aligns with your risk tolerance and financial goals.

Can You Provide References or Client Testimonials?

Request references or testimonials from past or current clients. This allows you to gauge their reputation and the quality of their services. It's a good way to hear from those who have had first-hand experience working with the advisor.

How Will You Customize Your Services to My Needs?

Discuss your specific financial goals and needs. A good advisor should be able to outline how they will tailor their services to meet your unique situation, whether it's retirement planning, investment management, tax optimization, or other financial concerns.

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