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Who Is a Financial Adviser and How To Select a Good One?

Who Is a Financial Adviser and How To Select a Good One?

Let’s accept this – all the knowledge of financial concepts are enjoyable to read. But the real challenge is to put the knowledge into action in your financial life. Some concepts like budgeting and saving are relatively straightforward and easy to implement. However, more complex ones like goal-based planning and asset allocation require some degree of financial expertise.

There can come a time in your financial journey when you feel the need for an expert who helps you, or in other words, a trusted financial adviser. This article will share some insights on the right kind of financial advisor you should select and some tips on selecting the right one for your needs.

Who is a financial adviser, anyway?

There is no clear definition as such of a financial adviser. The relationship manager in your bank or the uncle down the street who is after your life to buy insurance from him both call themselves financial advisers. In reality, they are financial product sellers.

Let’s get this straight: The financial adviser that we talk about in this article is the one who is a fiduciary or, in simple words, a person that puts YOU first. She charges a fee for her advice and does not earn by way of commissions on financial products. As a result, their advice is unbiased and in your best long-term interest.

In a welcome development, a few years back, SEBI brought out the Investment Adviser Regulations. As per the Regulations, financial advisers who want to charge for financial advice need to register with SEBI. They have to bring specific qualifications and experience and follow an exhaustive list of compliances. Such people are issued a license from SEBI as a “Registered Investment Adviser (RIA)”.

The value of having a good financial adviser

You can find a helpful asset in a good financial advisor. Her advice can really make a significant difference in the probability of you achieving your financial goals.

An ideal financial advisor is more of a trusted friend, coach, mentor and guide. She does not preach and teach but guides and counsels you from time to time when you feel stuck in your financial journey. She supports you in difficult market conditions to not fall into the valleys of fear and greed and helps you stick to your investment plan. Most importantly, the financial adviser creates a personalized financial plan for you. The process involves mainly the following activities:

  1. Organize your investments, which are spread out here and there, in one place.

  2. Performing your risk profiling and helping you decide on your asset allocation

  3. Decoding your monthly cash flow pattern and charting a savings plan

  4. Mapping your risks to the existing insurances that you have and suggesting measures to bridge the gap

  5. Estimating the future cost of the financial goals and create customized investment plans for each financial goal

  6. Give you a clear action plan on which scheme to invest in and how much to invest per month

  7. Assist you in setting up your recurring investments (for example, SIP)

  8. Do a periodic review of the financial plan

The stage when you should consider hiring a financial adviser

Suppose you are a first-time investor or in your early stages of your career. In that case, you most likely are single with no or very few financial responsibilities. In such a case, what you need is basically an initial push to invest your savings.

Now, this is not very difficult stuff. The internet is full of helpful stuff to help you learn and grow your financial knowledge. If you spend some dedicated time and effort, you can identify, say, 2-3 good mutual fund schemes and start investing in those, and you are done.

However, as you progress in your career and life, you become busy – getting married, starting a family, taking up newer responsibilities at work etc. Your monthly savings rise along with a rise in your income. For most people, this happens around 30—35 years of age.

In our view, this is an ideal time window for signing up a financial adviser. This is because this is the window where you need to make some long-term financial decisions. Having a good financial adviser by your side at this time can save you from losing money in costly financial mistakes in the long run.

Tips on selecting the right financial adviser

Below are some helpful tips to help you zero in on the right financial adviser:

  1. Look up her website and social media pages to check her reputation and credibility.

  2. Check her education, experience and certifications and be registered with SEBI as “Investment Adviser”. You can also visit the SEBI website to cross-check the details.

  3. Have a face-to-face conversation with her, either in person or over a video call. Does she sound knowledgeable and, more importantly, trustworthy? Would she be someone with whom you are comfortable to open up on your financial worries and past mistakes?

  4. Take good time to understand the scope of the engagement, her investing philosophy, the frequency of reviews etc. Get this written in a signed contract to avoid confusion at a later stage.

  5. Get a clear idea of the fee model. For example, will she charge a flat fee or a percentage of your assets under management (AUM)?


Choosing a financial adviser at the right time can make a lot of difference in your ability to meet your financial goals. However, a good financial adviser can make or break your financial life. Hence, it is essential to check the credentials and do the necessary due diligence before hiring the right advisor for your needs.


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