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Looking for a good investment adviser

Getting a good adviser is not easy. It is more like marriage - you may see many potential candidates, but you marry one.

Published: 11th October 2021 10:11 AM  |   Last Updated: 11th October 2021 10:11 AM   |  A+A-

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Good investing means you need to have a Good Investment Adviser. I am not getting into the nomenclature - whether he is a Registered Investment Adviser or a MFD - by whatever name called, we will call him an adviser. 

Getting a good adviser is not easy. It is more like marriage - you may see many potential candidates, but you marry one. The financial adviser is a person who is going to know all your financial details, and a person with whom you could potentially establish a multi-decade relationship. 

The whole process can be overwhelming and really daunting. I would suggest that you meet a few of them and make copious notes in the meeting. Many people will give you many questions to ask - here is my list. Not an exhaustive list, but by the time you finish asking and processing the replies, you surely will be exhausted!

When you are short-listing an adviser, make sure that you ask him the following questions. I am sure that there are many, many more questions to ask, but at least start with the following questions: Do you enjoy doing this work? - the question is whether he/she is there by choice or has he been saddled with this job because of the death of a parent or some compulsory family arrangement. 

Will you be in this profession for the next X number of years? If you are 40, this adviser should be in business for at least 25 more years. This helps. What about succession planning - what happens to the portfolio on the death of the Adviser?

What kind of clients do you deal with - is it similar to you or completely different. Say you are in the Bollywood industry and the adviser deals only with professionals employed in IT industry, there is no matching of minds.

What all products do you deal with - credit rectification, income tax consulting, mutual fund selling, life-insurance, home- Mortgage advisory, selling government financial instruments - all of this is financial advisory, ask him/her what is the range of services that he has. Along with this you should know the scope of work - transmission, transfer, bank account change.get the full clarification. 

How is he compensated - do you pay him on a per hour basis, or as a percentage of assets under management, as a commission agent - or a combination of these. Then ask him whether the answer changes if he were to be compensated differently. 

Ask him his style - say he is an investment adviser - is he a long term player or a short term trader. Matching of minds is very useful for a long-term relationship. Better to clarify these kind of basic things.
Is he/she easy to communicate with - you, your spouse, your children should all be able to understand what he/she says. Knowing the immediate steps to take in case of an accident or death is very important.

How will you measure the investment results? Do you promise to beat the index every year. How will you help me handle the variability in the returns. 

Honestly, there are at least 100,000 questions. 

Nine is just a good number to start with.

PV Subramanyam
Writes at www.subramoney.com and has authored the best seller ‘Retire Rich - Invest C 40 a day’



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