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How to Hire Your Financial Planner

By Sharma Vishal

How should I select a “true professional financial planner” who will help me get my financial plan, and provide me unbiased advice?

The answer to this question is simple.

Check the capability of the individual or the organization that you wish to hire as your financial planner. Ask some few simple questions such as:

A) What is the business model of the company? How does it earn its revenues?
B) What is the process that they would follow in building the financial plan? Have a look at a sample plan.
C) What is the team size? Their experience and qualifications?
D) Are their recommendations based on solid research or driven by commissions?
E) How long has the individual or the organization been in business? How many clients have they made financial plans for?
F) Can they give references of existing clients with whom you can speak?

Do a detailed discussion with your prospective financial planner. Once you are satisfied on all these parameters, then go ahead and sign him up as your financial planner.

What all should a financial plan do for you?
A comprehensive financial plan should help you set the following things right:
i) Protection requirements and how to meet them
ii) Emergency fund planning
iii) Your goals (Retirement, asset purchase, children’s needs, etc) and the money that you would require to achieve them.
iv) Detailed cash flows to help you understand the movement in your plan
v) View on your current investments
vi) How should your investments be spread into various assets in line with your risk taking capacity
vii) Investment Recommendations

What should be the cost of your plan?
We saw in the previous article the various ways that you would have to pay for a financial plan (including in some cases where there is no charge). Investors often tend to associate the cost that they are willing to pay for a plan with the amount that they are going to invest. That is not correct. The price that you pay for getting your plan built is not just about the investment that you are going to make. You should look at the overall benefit that the exercise is going to bring to you in terms of how efficiently you would manage your personal finances with respect to all the points that have been mentioned above.

Word of caution:
Do not decide your financial planner purely on the basis of who is going to charge you the least fees. Please understand there are no free lunches. And to build a financial plan which is comprehensive and takes into account all your requirements, a premium charge will have to be paid.

Also, while a CFP is a desirable qualification, the absence of it may not be the most appropriate reason to not select your planner. The approach and the expertise matter a lot. Take into account the other questions as mentioned above.

Conclusion

It is important to do financial planning but it is equally important to hire the right financial planner. The value that the planner can add to managing your personal finances is going to far outpace the fee that you pay. So go ahead and create your financial plan today!

I am working with PersonalFN. PersonalFN provides Financial Planning, Investment Planning and Mutual Fund Research and Recommendation services to investors, who are looking to invest in India. PersonalFN also provides Financial Planning Calculators and Online Portfolio Tracker Software to track your investments.

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