Choosing the right financial advisor: Key factors to consider

The High-Net-Worth Individual (HNI) population in India, holding assets above $1 million, is estimated to reach 16.5 lakhs by 2027. This is an increase of 107% from the 2022 figure, which was approximately 7.9 lakhs. Being a part of this growing group means having significant wealth, financial assets, and complex investments acquired through various means, such as entrepreneurship, inheritance, or successful careers.

This complexity also means you require specialised services and the expertise of a good financial advisor who can create customised plans to protect your wealth. Discussed below are some valuable tips and factors to help you choose the right financial advisor.

  1. Decide the services that you want to avail 

Financial advisors offer more than just advice on investment management. They can help you with various other financial needs, such as:

  • Retirement planning
  • Tax planning
  • Insurance planning
  • Estate planning
  • Investment planning
  • Debt management and reduction strategies
  • Philanthropic and charitable giving planning
  • Real estate and overseas property investments

The best financial planner is one who devotes time and attention to every detail and manages your wealth with confidentiality. By understanding your goals and concerns, they create a personalised plan to fulfil your visions.

  1. Check the fee structure

There are many ways financial advisors are compensated. These include:

  • Asset-based fees: Many advisors stick to the traditional method and charge a percentage, often 1% to 2%, of the assets they manage for you.
  • Flat fees: This model involves a fixed charge for advisory services.
  • Hourly fees: For customised advice on specific areas like retirement or estate planning, some advisors offer their expertise at an hourly rate.
  • Combination fees: Certain advisors combine different fee models, such as asset-based and hourly rates. This suits HNIs who want to seek combined services like investment advisor services and wealth management advice together.

It is important to understand the specific services you require from an advisor to choose the right fee model and type of advisory relationship.

  1. Evaluate their knowledge of Indian and foreign markets

Financial planners need expertise in both Indian and global markets, especially in countries where you hold assets. They should be well-versed with cross-border investment options, tax laws, and economic factors that can affect your investments.

This expertise is crucial for devising strategies that maximise returns while minimising risks. As a result, you can grow your investments and create a legacy for yourself and your heirs.

  1. Check their professional qualifications

The financial portfolio of HNIs is usually complex and diversified, with multiple products across asset classes and geographical regions. Some common investments include hedge funds, private equity, venture capital, or real estate funds. This complexity means your financial and investment advisor should be highly educated and hold advanced qualifications.

Their expertise in various financial products and strategies helps them offer personalised advice for your wealth management needs.

  1. Assess their experience in philanthropic planning

If charitable giving is a component of your wealth management strategy, choose a financial advisor that prioritises charitable endeavours. Be it through direct donations, a private foundation, a charitable trust, or a donor-advised fund, your advisor should be supportive of your charitable purposes.

Ensure your financial advisor has the necessary skills to create useful charitable giving strategies, engage in impact investing, and assist in legacy planning. This will help your good intentions contribute meaningfully to the philanthropic visions you truly care about.

More factors to consider when choosing a financial advisor

Check out some more tips that can help you select a good financial advisor:

  • Assess their experience, especially with HNIs clients who have similar financial profiles and goals as yours.
  • Make sure they place your best interests first and not their own.
  • They should have a clear, transparent communication style.
  • They should respect your investment inclinations and ethical considerations, such as ESG (Environmental, Social, and Governance) factors.
  • Inquire about their disaster recovery and data safety measures to safeguard your financial data.

Financial advisors bring expertise, personalised service, and a transparent approach to your wealth management. The best financial advisor can make a huge difference in how your income, savings and investments would be handled. So, make sure to follow the tips mentioned above and choose wisely.

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