Q1. Why is it essential to seek professional advice?

Today, with greater awareness of the need for financial planning and the various aspects that go into creating a thorough and precise financial plan, it is essential to know that you are seeking professional assistance with your financial plan creation from the right quarters.
Almost everyone in the financial services industry today claims to offer financial planning services. Major banks, brokers, and distributors of financial products have established departments or divisions dedicated to financial planning.

So, let us understand the various kinds of service providers who are involved in this activity:

Banks: They offer you everything from opening a bank account to remittances, to investments, and now they help you get a financial plan as well.

Brokers / Distributors: They offer stocks, mutual funds, insurance, post office schemes, fixed income products etc. Your neighbourhood mutual fund distributor, insurance agent, and larger national-level private distributors form a part of this segment.

Pure fee-based Planners:  There were not many pure fee-based financial planners in the country a couple of years ago.

However, since then, many individuals and companies have emerged on the scene, especially in larger cities where awareness of the concept is higher. They are now quite serious about pursuing a business model that offers pure, fee-based financial planning services. Some of these planners are well-known, while others are not. Thanks to the awareness of financial planning education, most of them have also acquired the Certified Financial Planner (CFP) tag.

Service providers offering both services: As is evident, these service providers provide financial planning services and also distribute financial products, such as mutual funds, insurance, and stocks. Financial planning becomes a vehicle for distributing their products. Many brokerage firms have transitioned into financial planning services.
Given the diverse types of players in the financial planning space, a question that is bound to arise is: How should I select a “true professional financial planner” who will help me create my financial plan and provide me with unbiased advice?

The answer to this question is simple.

Check the capability of the individual or the organization that you wish to hire as your financial planner. Ask a few simple questions, such as:

1. What is the business model of the company? How does it earn its revenues?
2. What is the process that they would follow in building the financial plan? Have a look at a sample plan.
3.  What is the team size? Their experience and qualifications?
4.  Are their recommendations based on solid research or driven by commissions?
5.  How long has the individual or the organization been in business? How many clients have they made financial plans for?
6.  Can they give references of existing clients with whom you can speak?

Do a detailed discussion with your prospective financial planner. Once you are satisfied with all these parameters, proceed to sign him up as your financial planner.

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