Many people have reached out to me asking how to select the Best Financial Advisor in India. This is a job easier said than done.
After all, you would like to give your hard-earned money to a person who
- is willing to hear the story of your financial journey
- understands your difficulty and challenges in earning, savings and investing
- listens to your dream to finalize your financial goals
- can create a financial plan which is customized just for you
- is passionate and wants to change your life
The Curse from the Past
Financial Advisory as a profession earned a bad reputation earlier because the intermediaries under the pretext of giving financial advice recommended financial products with higher commissions without their client’s knowledge. The interest of the intermediary was not aligned with that of the client. There was a lack of transparency and the client lost faith and trust in the erstwhile Financial Advisory profession.
A Step in the Right Direction – SEBI (Investment Advisers) Regulations 2013
SEBI realized this gap and came out with the Investment Advisers Regulations in 2013 to give a formal structure to this profession. SEBI has mandated minimum Education qualification, NISM certification and Experience as entry criteria to ensure that the right people take up this profession. The regulation tries to remove the conflict of interest, enhances transparency and improves customers’ experience.
The Financial Advisers who have been certified by SEBI to provide Financial Advisory services are called SEBI Registered Investment Adviser or Investment Adviser. As per the regulations in India, Only SEBI Registered Financial Advisers are allowed to give Financial Advice.
As per SEBI, the Investment Adviser (Financial Advisor) should not provide both Advisory and distribution services to the same client to avoid conflict of interest.
Category of Financial Advisors
SEBI has categorized Financial Advisors based on Fee
- AUA (Asset under Advice) based – The fee is charged as a percentage of Assets. The maximum fee that can be charged is 2.5% of AUA.
- Fixed Fee based – The Fee is fixed and not based on the percentage of Assets. The Adviser can earn through both Advisory fees and commissions.
- Fee Only – This is a group of Advisers who charge only fees and do not get money through commissions.
Avoid Advice from unregulated Financial Advisors
You should not seek Financial Advice from the following people.
- Non-SEBI Registered Investment Advisors – Some people called themselves Financial Advisors but are neither authorized nor have the requisite knowledge to give advice. They are not regulated by any regulatory body like SEBI and hence are not accountable for the Advice which they offer.
- Agents & Distributors – People have traditionally reached out to agents and distributors for investment in Equity and Mutual Funds. In absence of a good alternative that was fine but after implementation of SEBI regulation around Investment Advisers, you have a better alternative for seeking Financial Advice.
How do you go about Selecting the Best Financial Advisor in India?
- The first thing for you to do is to go through the Do’s and Don’ts list from SEBI
- You should then refer to the list of SEBI Registered Financial Advisors in India. Your search should be limited to this list.
- Within SEBI Registered Financial Advisors, I would suggest you go for Fee-Only Financial Advisors who would not take any commission for the recommended products.
- The next step would be to look for referrals. Connect with your colleagues and friends and see if they have taken the help of a Financial Advisor and would like to recommend one to you.
- If you do not get any referral, browse through the internet for recommendations, people reviews, feedback and Testimonials and narrow down your list to say, 10 Advisors.
- Browse through the website of filtered Financial Advisors to understand their thought process, biases and operating model to select the top 3 Advisors
- Talk to each of this final list of Financial Advisors to understand whose thoughts and motivations are aligned to yours and finalize one
Remember, you need to have a very tight process and timeline to decide this otherwise you will lose interest and one of the most important activities of your life may get delayed. Remember, in Financial Advice, time is of the essence because some of the decisions are irreversible.
Judge us on these criteria
I have enjoyed learning, investing and educating people over the past 3 decades. So when I was looking for an alternate profession post my IT career, the decision to start a Financially Advisory company FinMyn came naturally. The decision was further bolstered by the prevailing situation in which people were finding it difficult to identify an honest and transparent Financial Advisor. The framework (Vision and Mission) of my company allows me to easily implement my fiduciary responsibilities.
- I keep a very limited number of clients for high touch engagement and deeper relationships.
- I am the only person with whom you will engage during the contract period. This helps me enhance the client’s engagement experience with quality advice.
- Our engagement model is strategic and not transactional. We nurture a long-lasting relationship. If you want to move out of the contract and come back, you are more than welcome. Once a client always a client.
- I try to educate and bring my clients’ knowledge level to mine. If they can learn and manage the show on their own in future, I am happy to support them. This frees my time for advising another client.
- I prefer clients who are passionate about engagement and want to get the best out of it.
- It has been my continuous endeavour to educate personal finance to as many people as possible. Last year, I used 20+ remote sessions to share my knowledge with 5000+ people across multiple organizations, academia and society at no cost.
- Your google business review is my keepsake which I strive to earn hard.
Note – “Best Financial Planner”, “Best Financial Advisor” and “Best Financial Adviser” are used interchangeably. For ease of use and standardization, the writer has chosen “Best Financial Advisor”.
The writer is a SEBI Registered Adviser and Founder of FinMyn (https://finmyn.com). He provides Fee-Only Financial Planning and Investment Advisory services.
He has advised many clients in India, the US, Europe, the Middle East, South East Asia and Australia.
To know more about him, click on https://finmyn.com/about/.