What are the signals of knowing an adviser is good or bad?

Sadly even though one can write many points to know who is a good adviser…the need is for spotting the WRONG guy which is more important! If he says the following things, keep your antenna up and please pick up the signals:

1. Investing in equity is risky, so invest in debt: if he says this, it means he does not understand risk.

2. Short term is 1 year, long term is more than 1 year: He is a CA who should be filing your IT returns, not an investment consultant.

3. ULIPs are not a bad investment: He is a life insurance agent not a financial adviser / planner.

4. I will do it free if you invest through me: Managing conflict of interest is IMPOSSIBLE.

5. I will ask you to invest in about 10 fund schemes – between you and your wife. Again an agent and not an adviser…

6. “I will watch the markets for you and everyday tell you what to buy and what to sell. You see Mr. Client watching the market everyday and reacting is VERY VERY important for you” God!! run away from him…:-) he has no clue of what he is talking.


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  1. The word Advisor has been misused off late… Most of insurance agent call themselves financial advisors. Few of them lack basic of Financial knowledge.

    I would say it is just the trend. A R.E broker calling him self a Real Estate consulatant. The word consultant sounds more appealing right?

    Heights – There was a very small two wheeler garage near my house. Infact he did not even have a board. Recently he painted his little shop and there comes the board – Auto Consultant??????

    People can claim anything. we need to know who is right and who is wrong… at a very simple terms, if you know how to pick the right vegetables then we should also learn to know who is right advisor….

  2. No. Picking an adviser is not so simple as picking vegetables. You know you have picked a wrong adviser much much later, and at some stage it may not matter. The damage is done.

    Glib talking, right sounding jerks make up 97% of the tribe. Just like doctors. It is now fashionable for docs to PRAISE your immediate past doc – as a part of the marketing strategy…then slowly poison you against the old doc. I just know too many well sounding ‘advisers, consultants, adviser-consultant….’ – what I call agent.

  3. currently i know of on IFA who is asking people to stay on in one fund house. Why?

    Surely I am not saying anything on a public forum!

  4. Subra,

    You are right on 1,2,3,5, and 6.

    You are wrong on 4. It is not possible in India to manage advisory/distribution economics without doing both (except for HNIs). And, with current MF regulations, conflict of interest scenarios have little relevance – the difference between commissions of funds is too insignificant for an otherwise capable advisor to risk his reputation on.



  5. How can a MF adviser ever, ever say redeem Hdfc Top 200 and buy Carborundum Universal? or book a house – to be paid in instalments?

    aum based fee has to be TOTAL aum based fee. I know agents who encourage clients to withdraw from a ULIP to invest in MF. EEEEKKKK
    esp if the ul has lesser amc charges.

    i know clients who can manage conflicts. MOst clients cannot.

  6. Hi Subra,
    you have raised very interesting points. I was recently having a conversation with my co-bloggers and the debate took a turn of an Advisor vs a CA and how CAs can cheat while financial planning.

    My point was and always is – ‘let the buyer be aware’. Irrespective of an advisor being a CA or an agent – cheaters are every where. It is really important for the customers to be aware.. Hence I also wrote an article on the same topic to educate people to identify when things may be taking a nasty turn. Check out http://insight.banyanfa.com/?p=908. Would be glad to hear from you !


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