Know Your Financial Advisor

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Know Your Financial Advisor
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• KYC? Risk-profiling? Setting out on a wealth
  management journey can be a hard nut to crack.
  Relationship managers or advisors flood you with
  forms that need details about your financial
  objectives, assets, and liabilities to aid their
  understanding of your capacity to bear risks and
  expectations for return objectives.
• Your advisor sure knows a lot about you. But how
  well do you know your advisor? While you trust
  the bank or financial brand your advisor
  represents instances of forced selling of wrong
  products is not uncommon. This is a common
  phenomenon is even more pronounced between
  January to March, when their targets may
  over-ride your financial goals.
• Here is a checklist to judge your newly appointed
  financial advisor

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Experience

• Find out as much as possible about the advisors
  work profile and experience. Understand how long
  hes been in the advising business and how long
  has he/she served with the current bank or
  advisory firm. Switching employers frequently is
  definitely a brow raiser. If you meet someone
  with less experience consider his or her
  educational credentials.

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Market know-how

• Discuss global and local trends in financial
  markets with your advisor to evaluate his/her
  knowledge. He/she should know how the BSE Sensex
  has performed in the past months vis-à-vis global
  counterparts why it may not be the best time to
  park funds in Gold or what is the likely impact
  on ones portfolio from the RBIs upcoming meet.
  If you are not market savvy get a low down from a
  friend or read a little before you test him/her.
  Remember you are entrusting your hard-earned
  money in your advisor and you dont want to
  settle with I may not know, but they ought to
  know in the end.

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Understand the set-up

• The advisors recommendations often come from an
  in-house team of analysts. Ask your advisor more
  about the research team, their qualification,
  experience, recent recommendations and successes
  across products. It is not difficult to find out
  the best performing mutual fund but the entry and
  exit strategies for recommended funds make all
  the difference to your returns. For this an
  experienced team of analysts is vital.

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Check performance

• While you are most likely to see a sheet
  detailing the outperforming recommendations and a
  portfolio glorifying a success rate of 90,
  ensure you also get one for the buy-sell
  decisions gone wrong. Play by the 8020
  principle, which says that 20 of the decisions
  gone awry may wash out the gains made by the rest
  of the 80.
• Read More Here Know Your Financial Advisor

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