Twelve years ago, when I was researching for a school for my daughter, my criteria was simple. I was looking for a school where the commute was simple, the teaching staff was adaptive and the head of the school was dynamic. I knew that whatever I decided would imprint a lifelong legacy on my child’s initial years. The selection was not simple. Whatever I decided, she would have to endure it for 14 long years, in good times and also in bad, from lower KG to Class- XII. While making the choice, I never followed any conventional norms set by our society, or the way in which we rank schools through their Board results. It was a tough decision to make for us as parents. To take a call for the greatest asset that we have been blessed with was hard.
When it comes to selecting your financial advisor, I guess you will have a similar dilemma. Before I go any further, let me give you a disclosure. As a financial advisor myself, I don’t exactly fit into the criteria to write on this subject myself. But since I am more into preaching, than practising, maybe I can give you a perspective on what constitutes a good financial advisor.
First, let us be comfortable with the fact that there are some very good financial advisors around us. But the problem is that one simply can’t distinguish a good one from a bad one. That, at least, is true in the short run. The outcome of a good financial advisor can be derived over decades of advisory. Now, this is difficult. The same way it is difficult to choose a school for your child.
To find a good financial advisor, keep looking and ask your friends or family for references. Since the whole field of financial advisory is new to our society, it will be difficult to do thorough research.
When you meet an advisor, ask questions. A good advisor will not throw jargons at you. Instead, he will explain things in a very simple manner. Sometimes, he might not know everything you ask, which is normal. But with his honesty, you will understand his intentions.
A good advisor is thoughtful and sensible. He or she should understand you and your fears and aspirations. A good coach understands his players first. Only by understanding his players can he formulate a game plan.
If you go straight to him and say I have five lakh rupees and I can invest for five years, don’t expect an easy answer. A good advisor will ask you many questions. Your tax liabilities, your other investments, your net assets, your other liabilities. He might ask you your spouse’s financial details as well. The more he knows, the more prudent will his advice be. This brings me to one fundamental point: if you stick to one advisor, he or she will know a lot about you from before.
I believe a good advisor will almost force you to ask this basic question: What are you doing and why are you doing that? You may not have the answer. But that’s okay. A good advisor will make you ask this question, and when he can make you ask this question, you know you have found your advisor. Congratulations!
I am not touching on the traits of transparency, competency and honesty. If you have any doubt regarding these essentials in your financial advisor, run away as fast as you can and never look back.
Dipankar Jakharia
