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“What’s it takes to be financial planner and the one you should not hire”


So you have decided to hire a financial planner to manage your personal finance and help you in achieving your financial goals. First of all, Congrats! for the courage you have shown to hire a stranger to manage your money, especially for trusting his/her ability.
Ability is a critical point, especially in a financial planner resume. Most of the financial planners you see around are from finance domain who were Life insurance agents, Mutual funds broker, Bank managers, relationship executive etc. earlier. They left their well-paying job which gave them loads of commission and regular monthly income abruptly. Instead, they choose to come in a field they don’t have any knowledge. If you keenly observe them, they have this confused look of an infant who is handling calculator. I am not mocking anyone here but it seriously hurts people who seek tailored advice but get a prepackaged product. I have studied financial planners and their working patterns and had a chance to work with one (10+exp in FP) for a short duration. Furthermore, I have seen many CFP aspirants, some of them going through the certification and some who got the by forging experience documents. When you sit with them and try to get the essence of their knowledge, all you get is non sense. It’s not their fault anyway, Mere CFP certificate people get doesn’t give them enough knowledge to make a financial plan, one needs practical experience and in the way to acquire the same these guys will look for a job with a senior financial planner (individual/company) but there they will be taken for a sales position. Young hope, after going through rigorous study, failing in one or two papers and finally coming out successfully all they get is a sales man job.

There are some typical financial planners who outsource everything, from excel sheet in which he makes your plan to the knowledge to the top rated mutual funds picked from various sites and stock advice packages. Some of them are intelligently foolish enough that they claim to be the most proficient planners in the industry only to select an investment avenue for you sourced by some absurd random tip from the market. On the name of profound research what these planners are selling is fixed to each and every customer though the customer’s finances varies from one to one.

All I am saying is, this is a smarty-pants industry and most of financial planners force their fixed products into your financials, instead of studying your views and comparing options.

Not all of them are same, lot of young professionals are coming up to break the ice layer and bring some transformation in the industry. If you go with the above said name sake planners then there is no difference in being a client of a bank or a fat AUM Financial Planner. I will urge you to hire someone who really understand the field and values your view. Life is not a buy and sell call, take your call wisely.

Hire fee-only financial planner but do check the abilities. You don’t want an accountant who just manages your investment on an excel sheet or some software. Financial planner can’t be perfect; he should be the one evolving continuously. Make sure he/she understands financial markets and can answer your queries regarding the same.. Furthermore, try to understand how does he come to different conclusions and what is the theory behind it. You may ask the spreadsheet used for the calculation and do not be fully satisfied with the initial work because the first financial plan will not be perfect by any means, in practice the first plan will be a draft plan and you can ask for different scenarios as per your comfort.
Avoid financial planners who concentrate more on your investment fund  rather than plan. You can easily ask him to tell him few funds which are performing good and he will open the cards. The equity market is not the place to take influence, the winner today might be the looser tomorrow. A good financial planner talks about the road rather than a vehicle; you need to set your path first then choose the vehicle accordingly and that vehicle needs maintenance and sometimes it should be replaced for long distances.
Finally, after hiring and having the financial plan, make sure to be in touch with your financial planner. There are some who forget you after delivering the financial plan and will call only on renewal date only. Primarily it’s Financial Planners job to take updates if you are following the advice or not, if one’s not interested then dump that person asap.
At the end few bullet points for you to remember before approaching a financial planner:
1. Opt for a RIA fee-only, not all people are not authorized to advise.
2. Check the abilities, ask questions and understand his procedure.
3. Ask for an engagement letter, which is a formal contract mentioning the fees, the scope of service, renewal condition and addressing of complaints, if any.
4. Be open to your financial planner while he/she gathers data, disclose all the information which is necessary to build the plan and talk openly about your goals.
5. Remember, Financial planning is all about building scenarios, if you are not happy with the one presented, you can ask for another one.
6. Keep in touch with your financial planner, update him/her about any events which can influence the plan.

All the best for your journey ahead.


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