I watched 5 minutes on a channel that was discussing Financial Advisors. An interesting suggestion came up – one of the panelists said an advisor should get say 20% of the profits and about 10-15% of the losses in a clients portfolio.

Brilliant advise. If you do not know what a portfolio manager does and what a financial planner does, you have right to talk like this. Also sit on panels to judge ‘who is the best aggregator for mutual funds’ and call him the best fund manager.

A good financial planner should:

– make you understand the importance of goals

– help you set them

-tell you what is practical and what is not

– help you create a portfolio

-ensure that your wife/dependents know and understand what you do

– help you make a will / nominate properly

For all this done well, HE SHOULD GET A FEE. To think he can create a portfolio that will beat the market is wrong. If you get good returns, it is because YOU TOOK THE RISK. If you do not get a good return, you do not get a good return.

Among the good financial planners that I have met – there are only 2 types- a) those who know that they are not portfolio managers and b) those who do not know.

Of course there are those who pretend that they are – and may even have a track record. As soon as they realise the role of luck, better for them.

If there are financial planners who agree to a profit sharing agreement, God bless the planner and the client.

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