After globalization and free-market investments, India experienced a fresh breeze of investments from different segments of the society. Non-traditional investment options (mutual funds and market investments) that were earlier only under the radar of corporate and elite class of the society, are now accessible for everyone. With growing economy, BFSIs have also started targeting all segments of the society and they have the government’s support as well. In such a consumer-oriented culture, it often becomes hard for investors to choose the right investment strategy that suits their investment objectives such as a foreign vacation, their children’s education/marriage, building a retirement corpus, or simply creating wealth.
Therefore, opting for the services of a financial planner is the best way to ensure that you get maximum output from your investment. Follow these steps in your quest of finding the right financial planner for your investment goals.
1. Differentiate between Financial Planners
There are 3 types of financial advisors that investors can choose from: AI-based Digital Advisors, Online Advisors, and Traditional Personal Advisors.
A). Digital advisors are great when you don’t want an elaborate plan and you are satisfied with the surface-level advice. Such an approach is best suited for the individuals who are already quite aware of their capability and limitations and want to save on the high commission often charged by traditional financial planners. The charges of digital financial planners start from as low as 0.25% of the investment amount that makes them a cost-effective option.
B). Online financial planners offer more detailed advice than AI-based digital advisors as they also allow you to consult a team of professionals and get the answers for your questions. This is a better option than the digital advisors that generate answers based on computer algorithms and there is no human intervention at all.
C). Traditional financial planners are highly qualified and certified financial experts who offer their services either through a company or individually. This is a high-cost option that not everyone can afford as they often have a minimum investment limit that can start from a minimum lump sum investment of Rs. 5 lakh. However, their high charges are justified by their personalized investment strategies that are quite complex and usually do not fail.
2. Only Opt for the Services You Need
Regardless of the financial planner you choose, you’ve got to be mindful that you only opt for the services that you really need as it will also lower the overall cost of consultation. For instance, if you only need to manage investments, you can choose low-cost digital advisors. On the other hand, if you need a holistic advice on aspects such as insurance, market investments, estate planning, etc., you can prefer online advisors and/or traditional financial planners.
However, traditional financial planners offer separate strategies and information on each type of investment; may it be traditional or market investments. Therefore, personal financial planners allow you to get extremely detailed information on each and every aspect.
3. Perform a Background Check
Your investment is not just a number in a financial database. It’s your hard-earned money and you have every right to know about the professional background of your preferred financial planner (regardless of the platform they’re available on). Certifications such as Certified Financial Planner (CFP) hold quite a significance in India as such professionals go through a strict ethical and professional training. Similarly, you can also check if the financial planner is working with the right organizations.
You can also check the SEBI’s list of genuine service providers (whether they are online or offline) as they’ve also strengthened the regulations and started performing live-testing of advisors (company and/or individual).