Need help managing your finances? Consider working with a professional financial advisor. Check out this post to learn how to choose a financial advisor.

The best thing about investing is that you don't need to be a financial wizard to begin your investment journey. With bodies like SEBI and AMFI, along with investment companies, constantly educating people on various facets of investing, it isn't that complicated anymore to start your investment journey.

However, many investors may opt for financial advisors to save time, get professional advice or get their portfolio managed by an expert.

But should you select any financial advisor?

No, there are a few things you should keep in mind.

Before that, let’s take a quick look at who is a financial advisor.

Who are Financial Advisors?

A professional financial advisor is someone who provides expertise in helping clients make better decisions regarding investments, personal finance, and money matters. Professional advisors can offer a wide range of services, including-

• Build an investment portfolio as per your investment goals

• Buy/sell financial products on your behalf

• Recommend financial and insurance products

• Tax planning

• Risk management

• Educate you about financial products

• Work as a trusted advisor

What are the Different Types of Financial Advisors in India?

Apart from knowing what is a financial advisor, it is also essential to know their types. In India, professional financial advisors are RIAs, and many of them also have CFP qualifications. Here's what they mean-

• SEBI RIAs

  With the growing cases of financial misconduct by people claiming themselves financial advisors, the Securities and Exchange Board of India (SEBI) introduced Investment Advisor Regulations in 2013. Under the regulations, individuals and entities offering financial advisory services must register themselves with SEBI.
  
  Such individuals/entities who pass the stringent SEBI norms and get themselves registered are known as Registered Investment Advisors (RIAs). Before hiring a financial advisor, check the list of SEBI RIAs so that you only deal with registered advisors.

• CFPs

  The Financial Planning Standard Board (FPSB) is a US-based organization that offers education and certification for financial planners and advisors. Its Certified Financial Planner (CFP) certification has global recognition and is considered one of the highest qualifications in the advisory industry.
  
  If an individual or entity claims to be a CFP, you can verify their details from FPSB’s directory, which contains details of all the CFP holders in India.

How to Choose the Right Financial Advisor?

Follow these steps to select a professional financial advisor-

1. Advisor Credentials

   Start with verifying the qualification and credentials of the advisor. As mentioned above, you should only deal with a SEBI Registered Investment Advisor (RIA).
   
   As for the qualification, it could be an added benefit if the advisor is a CFP. However, this is not mandatory as several reliable financial advisors in India are RIAs but don’t have CFP certification.

2. Work Experience

   Consider working with a financial advisor who has witnessed at least a few market cycles. The experience gives them a deeper understanding of how various asset classes behave during such periods and improves the quality of their advisory services.
   
   So, choose an advisor with work experience of at least 5-8 years. Also, if you need their services for a specific task like tax planning or risk management, ensure they have adequate experience in that particular field.

3. Fee Structure

   Quality advisory services come for a fee. Most of the advisors in India charge a flat annual fee for their services. Then others charge a certain percentage of the returns the investment generates.
   
   Be wary of the advisors who don't charge any fees or extremely low fees, as they generally earn commissions from the products they recommend to their clients. As a result, the suggestions of such advisors can be biased.

4. Reference Check

   You can also try contacting existing clients to check whether they’re satisfied with the advisor’s services. Ask them if they’ve seen any remarkable difference in their finances after they’ve started consulting with the advisor.
   
   You can also check online reviews and ratings of the advisor or his/her company to analyze better the quality of services offered.

Consult a Financial Advisor to Better Manage Your Finances

It is wrongly believed that only the rich and wealthy need financial advisors. On the contrary, anyone who needs assistance with their finances and setting long-term goals can benefit from the knowledge and experience of trusted financial advisors.

Now that you know how to choose a financial advisor, make use of the knowledge and select a professional who can get your finances on track and help you live a more secure and comfortable life.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.