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Is it Time to Get a New Financial Adviser?


So many people refuse to carry out a detailed background check on a financial adviser before hiring. At the end of the day, the selected adviser may end up causing them to lose more money. It is essential to have a financial adviser who isn’t just certified, but is also good for you.

There are some advisers who because of the attractive commission expected from a particular product end up making recommendations that are unsuitable for your needs. While this is the most common sign, it isn’t the only sign that your financial adviser may not be right for you and the time is ripe to end the relationship.

There are some advisers who as a result of the attractive commission expected from a particular product end up making recommendations that are unsuitable for clients needs

Other signs include:

1. Your Adviser has little or no credibility

You should know that there is a difference between a financial adviser who is a SEBI-Registered Investment Adviser (RIA) and one who is only a sales person trying to sell investment and insurance products.

While the first has higher odds of having your interests at heart, the latter is only just about making your buy investment products so he/she can earn commission on such sales. If you notice your adviser falls in the latter category, then you may have to reconsider the employment of such a person as your financial adviser. According to the Chief Financial Coach of Wagh Financials, Shilpa Wagh, those who are SEBI-RIAs are so licensed by the Securities and Exchange Board of India to offer advice to their clients for a fee.

These advisers are prohibited from selling investment products and this makes it easy for them to offer unbiased advice to their clients. That in turn makes their advices less product-centric and more client-centric.

2. A discrepancy between the adviser’s recommendations and your level of risk tolerance

The Founder and Chief Executive Officer of 5nance.com, Dinesh Rohira, stated that the level of risk tolerance differs from one investor to the other and no universal rule exists.

He added that because of the attractive commission expected from a particular product, some advisers end up making recommendations that are unsuitable for a client in term of financial goal or risk tolerance. There will be an apparent conflict of interest in such a case and the best thing would be to change your financial adviser.

3. Your Adviser Does Not Provide Quarterly Financial Reviews

A financial planning isn’t complete without financial counseling or reviews carried out at regular intervals. In fact, experts recommend at least one of such reviews quarterly. However, there are some advisers who refuse to have such meetings with their existing clients. They are rather preoccupied with getting new clients.

A financial planning isn’t complete without financial counseling or reviews carried out at regular intervals

Bhakti Rasal, a financial planner, noted that the first role of any financial adviser is to simplify the financial life of his/her client. Rasal advised clients to evaluate the performance of the adviser not based on the investment returns but rather based on an assessment during the period when they review plans.

4. You Have Conflicting Opinions With Your Financial Adviser

The CEO of Hareepatti, Gurleen Kaur advised that if a person feels there is conflicting opinion with the financial adviser’s and particularly when the person isn’t convinced about the adviser’s thought process on his or her finances, such person should consider looking for someone else. According to him, the financial adviser should be able to make recommendations by putting himself/herself in your position.

5. Your Financial Adviser Keeps You In the Dark About Details.

Some financial advisers choose to hold on to facts when they are reviewing investments and making recommendations of new investment products. This amounts to a clear case of cheating since a client has every right to know why you should invest in the specific recommended products or the bad performance of any investment.

Wagh noted that good financial advisers would make it their duty to educate investors about all the possible advantages or disadvantages of any prospective investment from the risk or reward point of view. In addition, a good adviser will also give clients logical reasons with facts and detailed figures about the path of an investment based on the time horizon of the investment and risk profile.

6. You Do Not Trust Your Financial Advisers

Kaur noted the importance of trust in a relationship where money is involved. He added that ambiguity should have no place in such relationships and confidentiality also ought to be maintained in such situations. Thus, he expressly advised that if a person feels the trust is compromised, such person should put a stop to the relationship.

It is also essential for a financial adviser to give sufficient details about their relationship management with clients, clear fee structure details. In essence, a financial adviser should be reliable, efficient and transparent. If your adviser is not any of those, it is time to get a new adviser.


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