How To Identify A Trustworthy Financial Advisor For Your Investment Planning?

Pawan Agrawal
Pawan Agrawal

When individuals start planning for their investments, they normally get confused with the plethora of investment options available in the market. Which investment they should choose, and which one they should avoid, becomes a never-ending process taking few months to several years.

Equally or more confusing is identification of a suitable, trustworthy financial advisor. Every advertisement, television show and article on an investment product talk about consulting a financial advisor before making an investment decision. But the real question facing investors is, ‘How to identify a trustworthy and suitable financial advisor’ out of thousands of self-proclaimed financial advisors in the market?

A suitable financial advisor should not only be equipped with technical knowledge about investment products, taxation, risk profiling, portfolio construction etc. but should also have experience of managing clients’ emotions and expectations, know impact of different market cycles on clients’ investment patterns, exhibit discipline and intent to guide the investors towards their financial goals.

To gauge the above qualities and requirements in his prospective financial advisor, an investor should ask the following questions and get satisfactory answers from his advisor before starting to invest.

1. Financial Goal Planning- Creation and Management

All investments are made with some goal in mind-It may by wealth creation, child education, buying an asset, retirement et al. A suitable financial advisor should have tools, process and goal management solutions which he should provide to client alongwith investment products. Since some goals may be many years away, a methodical goal creation and management solution shall help the client and also the financial advisor to monitor the goals on regular basis. Without goal management solutions, it shall not be possible for any financial advisor to remember all goals of all his clients. He shall not be able to guide his clients towards their goals and thus, basic objective of investment shall get defeated.

2. Investments Review-Process & Frequency

All investments need regular review due to various factors like change in tax laws, change in investor’s profile and his needs, performance of products, approaching goals etc. A suitable financial advisor should have an investment monitoring process and systems to execute that process. A periodic review helps to weed out the poor performing investments and realign portfolio with goals.

3. Suitability of the Product/Investment

Suitability of a product for investment is a logical extension of goal planning. Only once the needs of client are established, a financial advisor is able to suggest the right investment solutions. If investments are suggested to an investor only on the basis of returns, and without discussion of his goals, chances are that the financial advisor is only pushing his favourite products or flavour-of-the-season investments, which may not be relevant to the investor.

4. Past track record over long/medium/short term

An objective past performance track record over short/medium/long term of suggested investments should be considered to validate the investments suggested by an advisor. A seasoned financial advisor constructs a balanced, diversified portfolio for his client. For him, consistency in performance is more important than short-term returns. High returns over last 1-2 years may be due to excessive risk taking or market cyclicality and may not be sustainable over long term.

5. Charges/Fees associated with Investment

Equally important for an investor is to know the implicit and explicit charges and fees associated with the investments and services that his financial advisor is proposing. Though buying cheap is not always the best policy, there are few products like insurance plans and PMS(Portfolio Management Services) which have high costs associated with them and are pushed by some advisors a lot. Investors should be careful of such suggestions and only after they are convinced about the relevance of such products, they should go ahead with the advisor.

6. Online view of above facilities/information

While many advisors may talk about providing the above facilities and services, they/their organisation may not have desired process and technology to deliver the promise. Their claims should be validated by visiting their organisation website and only if all the services and facilities promised are mentioned on the website, one should consider taking services of those advisors. If the organisation doesn’t promise to provide these benefits, there is no way that an individual advisor shall be able to provide it to a client.

7. Online Portfolio Tracker-User-friendliness and Features

A financial advisor’s services should include providing the client an online portfolio tracker where an investor can view his investment details anytime and from anywhere he wishes to. A user-friendly online tracker helps not only to monitor the investments but also to carry out future transactions and to keep record of all transactions at one place. Absence of an online tracker lacks transparency, tracking of investments and convenience to clients who are always on the move or are in transferrable jobs.

8. Goal and Asset Allocation alerts-Availability and Process

Since investments are made to fulfil future financial goals, an online goal planner should be in-built in online portfolio tracker. Only when the investments are linked with goals, an investor can know the progress of investments towards his goals. A defined goal alert process ensure that an investor is able to shift his risky investments to safer options to avoid market shocks when the goal approaches. Absence of goal planning means that an investor may under invest for his goals and there might be a shortfall when the need of fund arises. Also, without goal alert mechanism, the investor may not remember or know when to transfer his risky investments to safety.

9. Client Servicing Process

Investing is an on going process and may require several service needs like updation of contact details, bank account change, documentation to meet new laws, advice on investments, redemptions, start and stop of SIP and many more. A financial advisor should have a defined client servicing team and process to meet these needs of his client. Without a client servicing process, it shall not be possible for an advisor to service all his clients at all times. An advisor may be on leave due to poor health, vacation, family obligations etc. and at such times, a well trained client servicing team shall be able to assist the client in need.

10. Succession Planning for Advisor/Relationship Manager

An advisor may have all the requisite qualities required to meet a client’s requirement. But, over years, it is possible that the same advisor switches jobs, gets relocated or may even change his field of work. An investor should enquire about such possibilities and the process followed by advisor’s organisation to assign his client relationships to a new advisor/relationship manager. How shall a newly appointment advisor understand about this client’s needs, profile and orientation should be a defined process with the advisory company.


Investing is a long term journey well travelled with a qualified, experienced and process driven advisor. Finding a suitable financial advisor is as important as identifying the best investments options. A financial advisor can guide his clients towards their financial goals, both short term and long term, only when he is backed by defined process and systems, support team and technology.

With the above probing questions, an investor can identify a suitable advisor for his financial guidance, an advisor who shall not only make the journey disciplined, but also enjoyable and peaceful for the investor.

Happy Investing!

Pawan Agrawal is the founder and managing partner of Investguru. You may reach him at .

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