Ok you are too lazy to make a financial plan yourself, right?

I will be more charitable – you are very busy and your wife reads my blog. She has been bugging you and saying ‘Wake up, make a plan….’ so at last you have found a financial planner.

What will you ask him? Here is a primer….a good place to start. You can add to these questions, not reduce them. Tell him that you may be carrying a tape recorder and may want some answers in writing. See if this itself puts him off, or do the questions put him off!

 

1. Are you a fiduciary? Well in the USA a Planner who claims to be a fiduciary is duty bound to put YOUR interest ahead of his. In the Indian context ask him ‘I will pay you a fee, but tell me that this is the only fee that you receive’. And I want this in writing.

The problem is it is much easier to earn Rs. 50,000 as a commission by being an investing agent and it is very difficult to justify Rs. 5000 as fees – EVEN IF YOU CAN SAVE THE CLIENT much more than Rs. 5000 in MF and ULIP fees.

2. What all will you do, what will you not, and how much will you charge me?: This is a big question and deserves a separate post!

3. What are your qualifications? Subra says qualifications do not matter but want to know whether you have taken the trouble to go and get yourself a good degree lik CA, CPA, or MBA from a decent institute…

4. Are you alone in your practice or do you represent a brand? – if you do represent a brand, what all services do you do other than planning? For example ask the planner whether he is a mutual fund agent, a life insurance agent, a PMS provider, a broker, an Income tax return filer…..he could be many things. In such cases conflict of interest is MORE difficult to handle.

5. In all the products that you recommend to me can you assure me, in writing, that you or your firm is not being compensated for the investments that I am making?

6. Will you admit to me the mistakes that you have made in my portfolio or will I have to appoint another professional to ratify what you have done?

7. If I am paying you a fee, can I assume you to be asset agnostic? which means you will not really worry about my shifting from MF to bank FD or MF to real estate or vice-versa?

8. What types of clients do you deal with? Financial portfolio wise will be in your top 20% or where will I lie? Is this business attractive to you or not?

9. Can I see a sample Financial Plan – you are of course welcome to mask the name of the customer but all other details will have to be accurate and I would prefer a client who has 2 small kids, dependent parents, own apartment and monthly expenses should include a pet, one vacation in India and one foreign vacation once in 3 years.

10. Do you have any strong Investment Philosophy? I am pro real estate and would hate you if you are pro equity like Subra of Subramoney!

11. How often will be in touch with each other? Will we communicate on email, face-book, phone…? I am happy if we do a bunch of SIPs and meet once a year – unless there is a strong reason for us to meet.

12. Will you please speak in a simple language that I can understand and not in a language that requires a PhD in finance? I have a PhD, but in law, not finance. Financial Jargon scares the hell out of me.

13. Who are the others in your team with whom I will have to work? Or is it only you that I will work with?

14. What makes your client experience unique?

15. Can I have 3 of your client references – people who are like me and who will answer many questions about you?

well there could be more…..but this is for now!! but read this too!

http://www.subramoney.com/2010/02/being-ready-for-the-financial-planner/

 

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  1. This is good stuff Subra. I am keen to speak to you. How can I get in touch with you for a not-so-public conversation, pl.

    I can be reached on 982-000-1787.

    rgds
    sumit

  2. it may seem as asking :what happens to ‘HARAN’ (DEER)? after hearing complete ‘RAMAYAN’, but i have basic question: are finance planning and investment planning (rather investment management) same or in other words : can we expect that our savings would be invested for the best or at least fall in first quartile return/gain in selected detailed investment avenues from our finance planner? or is he supposed to suggest the blue print of our investments depending upon our resources and goals as per our risk tolerance etc. on general assumption for the avenues of investment suggested without the detailed investments and expected returns/gains?

  3. I find this as a great starter.. traditionally, those helping with financial planning in India are often the known people or cousins, who have either a LIC policy to sell or another investment plan (read:agent).

    If anyone asks these questions to them, I am sure you are on the verge of ruining a relationship – and that could be a spoiler. No one will think of how that affects oneself is a reality. I had faced this one, but realized it much later.

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