In India, where managing money and paperwork can be complex, having a financial advisor is essential. You need a single point of contact (not yourself) to help navigate your financial journey. But what makes a good financial advisor, and why is it so crucial to choose the right one?
Key Qualities of a Good Financial Advisor
First and foremost, your financial advisor must be well-qualified. Just as you wouldn’t trust your health to an unqualified person and instead go to a doctor, you shouldn’t entrust your wealth to someone without the necessary expertise. Health and wealth are both sensitive and complicated domains that significantly impact your life in various ways. Credentials ensure that the advisor has the education and experience to manage your financial health effectively.
Second, a good advisor should be an entrepreneur, not an employee of a bank or brokerage firm. Why? Because employees are often product-focused and driven by sales targets. Their advice may be biased toward selling you specific products rather than focusing on your financial goals. On the other hand, an independent advisor who runs their own business is more likely to focus on tailored solutions for your needs. They typically offer multiple financial products and strategies, balancing key factors like risk, return, liquidity, and time period requirements. Their knowledge of financial ratios, formulas, and diverse products is crucial in balancing your portfolio across different asset classes, adding value beyond a one-size-fits-all approach.
This allows them to create the right mix for your financial goals. Additionally, this person should be a full-time advisor (not part-time), so they can dedicate the time and focus required to understand your long-term financial vision. Their only business should be managing your money—not juggling multiple ventures.
A good financial advisor must be someone who you can trust for the long-term. You are entrusting them with your money and your future. They should be a long-term partner who is there throughout your entire investment journey, not just someone who makes a sale and moves on. This sets them apart from bank or brokerage relationship managers, who often change jobs and provide inconsistent service.
Why You Shouldn’t Go It Alone
Many people hesitate to pay for financial advice, thinking they can manage their finances on their own. The cost of not having an advisor could far exceed the fees you pay for professional advice. Without the right guidance, you risk making costly mistakes that could jeopardize your financial goals. Remember, it takes years of education, expertise, experience, and wisdom to write a prescription—so don’t self-medicate. The cost of going wrong or doing nothing is massive—it might cost you your financial goals!
Ultimately, finding the right financial advisor is a critical step toward achieving financial freedom. Choose wisely. Look for a well-qualified, entrepreneurial advisor who serves as a single point of contact, deals with multiple products and solutions, and is long-term oriented—someone who will be there from the beginning of your investment journey to the end.
(The writer is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal.)
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