Choosing The Right Financial Advisor

In my previous column, I emphasized on the importance of asset allocation. With that hopefully in order, the next step is to select the right financial advisor. An age old investment saying goes “Don’t put all your eggs in one basket”, but what’s the use if the eggs are rotten?! Before diversifying your investments, you need to check if you’ve have been advised the right product(s). This is possible when you choose the right financial advisor/ broker. They are available in plenty – practicing in banks, broking firms or independently – under fancy tags like Investment Advisor – Wealth, Financial Planner, Wealth Manager or VP – Wealth. Given this range of choice, how do you decide who is best geared to take care of your money?

Experience Counts:
A surprising number of people just rely on the spoken word, entrusting their money to whoever portrays a rosy image. Interrogating any financial advisor’s work experience is crucial. It might be far cheaper, but extremely risky to avail the services of freshers because there’s high chances of them job-hopping or opting for a career change, leaving you high and dry and scrambling for a new genie! If you need an advisor who can give holistic advice, scout for one who has been through at least one market cycle, typically lasting 4-5 years.

Financial Planning:
Ensure that while recommending you products, your advisor has taken into consideration your financial goals and risk appetite. Your financial objective and risk profiling should be considered prior to recommending any products.

A good financial advisor should have integrity and ethics. Transparency is the key. You should be informed of the overall expenses involved in the recommended product. If he/she is representing a bank, then be informed of the revenue earned by the organization, as most recommendations are based on target pressures. If the advisor is transparent, he/she will disclose it and explain the rationale behind recommending a particular product. Ensure all fine prints are revealed in black and white.

Reputation And References:
Before signing on with an advisor, verify his reputation in the market and do a background check. The simplest way is to ask him for references from clients. Speak to at least 3 to 4 people and get their feedback before entrusting the advisor with your portfolio. Google the individual, there is always useful information available.

Experts recommend choosing an advisor who runs his own practice, instead of one employed by a bank or brokerage firm. Assume you opt for the latter and develop a rapport with the advisor, build a trustworthy relationship since they understand your needs and works towards them, then suddenly one fine day, you realise that the advisor is leaving the organization! Now you’re stranded and have to start over and trust a brand new entrant. This is unfair to the investor as trust-building takes time.

Research And Support Services:
Right advice is backed by right research. It’s important for a prospective client to understand the advisor’s research capabilities. Failing this would result in wrong product selection. A financial advisor should take into account quantitative and qualitative research. An advisor’s work doesn’t end with advice – it’s important to be easily accessible to the client, and must frequently update clients about their investments. Service is as important as investments. There are many instances where the advisor does a disappearing act after the product is sold.

Your investment philosophy may differ from your advisors, but he should be patient enough to listen and accommodate some of your preferences. An advisor shouldn’t be too rigid in his approach. For instance if you are a conservative investor, it is incorrect for him to push you to invest into equity which is aggressive.

After all, if the great explorer Christopher Columbus had the wrong advisory committee, he would still be on the dock!

Mehran Felfali
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About Mehran Felfali

Owner of investment and consultancy firm – ‘Ethix’ is open to answering any relevant queries on handling your finances. Mail him at: or visit his website on

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