Questions to Ask a Financial Planner in India

In short: five questions settle most of it. What will I pay in a year, in rupees, including GST? Does anyone connected to you earn anything from what you recommend? Who will prepare my plan? What will the plan contain? What happens after I receive it? Ask them on the first call, and ask for the answers in writing before you pay.

The rest of this guide lists twelve questions in four groups, says why each one matters, and describes what a clear answer includes. Take the list to your first call.

The money

1. What will I pay this year, in rupees, including GST?

A clear answer is one number, with GST stated. If the fee is a percentage of your investments, ask for it in rupees for your portfolio today, and when the portfolio doubles. SEBI caps what a registered investment adviser may charge an individual or family for advice on SEBI-regulated investments: ₹1,51,000 a year in the fixed fee mode, or 2.5% a year of the assets advised on. GST is on top. Our guide to financial advisor fees in India shows how to compare quotes.

2. What does renewal cost, and what does it include?

Plans need revisiting as your life changes. Ask what the second year costs, what you get for it, and whether renewal is your choice.

3. What is not included?

Ask what you would still pay for, or do yourself: tax filing, placing transactions, insurance premiums, brokerage. A plain list of exclusions is a good sign.

Independence

4. What is your SEBI registration number?

A registered investment adviser's number starts with INA. Check it on SEBI's register before you pay; our guide to checking an adviser's SEBI registration walks through it.

5. Does anyone connected to you earn anything from the products you recommend?

Ask about the adviser, their family and any group company, and ask about insurance as well as mutual funds. SEBI requires advisers to keep advice and distribution apart client by client: if you take advice from them, their group or family may not also sell you products.

6. Will you recommend direct plans?

SEBI requires a registered adviser to recommend direct plans wherever they are available. Direct plans carry no distributor commission.

The work

7. Who will prepare my plan, and who will I talk to?

The answer may be the registered adviser, a team, or software with an adviser's sign-off. Each can work; you should know which you are paying for.

8. What will the plan contain, and when will I get it?

Ask to see a sample. A full plan usually covers your goals and what each one needs, your emergency fund and loans, your life and health cover, your investments and asset allocation, and your tax regime. Ask how long it takes once your information is complete.

9. How will we review it, and how often?

Ask how many meetings are included, how you can ask questions in between, and how quickly you will get a reply.

You

10. What will you need from me?

An adviser must assess your risk profile and share it with you before giving advice, and needs your full financial details to do so: income, expenses, investments, loans and insurance. Ask what forms you will fill in and how much time it takes.

11. Will I place the investments myself?

Under SEBI's rules a registered adviser advises; you decide. An adviser may not carry out any trade on your behalf without your specific consent to that trade, and may not hold your money or securities. Ask how you will put the plan into action.

12. How do I complain if something goes wrong?

You should get an answer before you sign: write to the adviser first, then use SEBI's SCORES portal, then online dispute resolution. The adviser's website should explain the steps.

If retirement is the main question

Add these for a retirement-focused first call:

• How will you work out the amount I need, and which assumptions will you use for inflation and returns?
• How will you plan the move from saving to drawing an income?
• How will my provident fund, gratuity, pension and other lump sums fit into the plan?
• What happens to the plan if I retire earlier, or later, than planned?

A clear answer shows its assumptions and explains how the plan changes if they turn out wrong. Be cautious of an answer that gives one figure with no assumptions behind it.

What to be cautious about

Before the call

1. Check the registration number on SEBI's register.
2. Write down your goals, rough figures for income, expenses, investments and loans, and your cover.
3. Take this list, and note the answers.
4. Ask for the fee, the scope and the agreement in writing before you pay.

Our guide to choosing a financial advisor in India covers qualifications, the agreement and the risk profile in more detail.

About SahajMoney

See a sample plan, how the process works or what the service includes.

Registration granted by SEBI, enlistment with IAASB and certification from NISM in no way guarantee performance of the IA or provide any assurance of returns to investors.

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