Who should be on your Money Team?

Last Updated: Sat, Jul 07, 2018 12:01 hrs
Financial Planner/Advisor (Image Courtesy: Happyness Factory)

When it comes to getting advice regarding money matters, there's no shortage of sources; family, friends, colleagues, insurance agents, advisors, planners, etc. And the result is a collection of unnecessary and irrelevant products.

A rather pointless standard people strive to achieve is that of having a Gold or Platinum tag attached to themselves. The general belief is that the elevated standard, because of the tag, will provide them with customized, free and the best service. Recently, I came across an individual who said to me, "I am a Platinum client of XYZ bank. They have allocated a relationship manager to my account who checks up on my progress regularly and the best part is that I have gotten a financial plan completely free of charge." The said plan was simply a financial strategy. There was no detailed analysis, effort or thought given to the overall financial goals and strategy. Basically, the plan was completely wrong to base any financial goal upon.

What is then the correct way to get advice?

Creating a comprehensive strategy which would include every aspect of one's personal finance would constitute the correct approach. Simply put, there is a pressing need to gain a holistic view of one's overall situation prior to creating any plan. The ideal first step would be to ask yourself a few important questions.

Just like an infection in one part of your body can spread across other key organs, a single decision in the financial aspect of one's life can affect their entire financial situation. This point needs to be understood and prudent decisions must be made keeping it in mind.

Picking a good financial advisor

Having just one person or team who takes stock of your cash flows, assets, liabilities, liquidity needs and helps you firm up your financial goals is the best way to go about the process of choosing an advisor. Even for those who think they're capable of making the right financial decisions, a financial advisor can prove effective and efficient in managing overall finances. If you believe you're capable to being your own advisor (I wouldn't recommend it), you should spend time on understanding areas of personal finance, changing economic trends, products and options suitable for you. Additionally, any strategies you might have lined out regarding insurance, risk management, tax and retirement planning, etc. must be implemented in a timely manner.

How should I choose a Financial Planner/Advisor?

Today, a lot of agents, financial distributors and banks are labelling themselves as financial advisors or planners, naturally causing confusion in the minds of investors. For example, if you ask a person to pick between a Certified Financial Advisor and Certified Senior Financial and Investment Specialist, over 90% would pick CSFIS due to its more impressive sounding title. Incidentally, both these certifications are fake but to a new investor, the "certification" with a higher value will seem like the right option to go for.

The important point to remember while picking a financial advisor is not to worry about what questions to ask them but to take cues from the questions they ask you.

Step 1: How detailed and comprehensive was the data-gathering interview?

This is one of the most important steps and is what drives all the advice you receive. Any good financial planner would look to gather comprehensive data to build a plan upon. A good financial planner utilizes his skills to better understand the client's overall situation and emotional issues to handle the overall picture. Sales people focus only on how their own scheme will benefit you, while avoiding the big picture and thus should be avoided.

Step 2: Check how the planner discusses risks and returns with you

No good financial planner will ever promise you sky high returns, indicating that he is the right person to work with.

Step 3: Avoid looking at the bank brand and opting blindly for advice

Banks are unlikely to dispense advice in the same way a certified advisor would. Most relationship managers in banks are sales people on the lookout for selling maximum products. Thus, a wide-eyed approach is necessary while looking for the right kind of advice.

Step 4: Does the financial advisor cover every possible avenue of planning?

Areas such as estate planning, retirement planning, etc. should be discussed at length by the advisor in conjunction with the investor.

Someone once said on TV, "Would you go to a chef for a haircut, or a barber for food advice?" The same principle works in picking the right advisor for your finances. The issue in today's financial world is that with almost everyone using the similar designations, differentiating between the noise and the real deal is becoming increasingly difficult. Make sure you understand all terms being used to make the best and more importantly, the right decision for yourself.

Who should be on your team?

Appointing each of these key members, in addition to a competent financial advisor/ financial planner, to help you appropriately balance the financial area of your life is a good strategy.

Chartered Accountant

CAs today provide assistance in several areas such as bookkeeping, preparing and filing returns, tax audit, tax planning, etc. Hiring a CA is highly beneficial and as such, you shouldn't look to cut corners and attempt to do everything yourself. In fact, when you compensate the CA for their professional service, the advice you receive will be a function of the fees you will pay.


Maintaining a good relationship with your banker could lead to preferential treatment and better rates on loans and other deposit products. If you're unhappy with the services provided by your current bank, move over to another bank.

Public Sector banks are a better avenue to purchase loans from than Private Sector Banks because they are likely to give loans at a lower cost than private sector banks. So, even if their infrastructure might not be great, the savings that you will create over a period of 10-20 years is likely to compensate for the prior inconvenience.

Real Estate Agent

Having an ethical broker who not just looks to showcase properties but also objectively advises you about appropriate prices and gets you the best deals is a necessity. The agent's conversance with paperwork and their level of diligence should also be considered while hiring one. You might want to consider hiring a real estate firm in case your initial investment is on the larger side.

Insurance agent

There are a lot of misconceptions that surround the topic of insurance. These cause most people to have inadequate insurance, the wrong set of policies and end up paying huge premiums. While a good financial planner will derive the quantum of cover you must have in place for any financial risk you might face, it is a competent insurance agent who will help you put into action the plan laid out by the planner. Additionally, the insurance agent will regularly service you with updates, premium collection, submissions and receipts.


People require legal help in many areas of their lives. With respect to real estate, it is important that all property-related documents are vetted. Many people bypass real estate lawyers in lieu of real estate agents who might not be completely familiar with the ins and outs of the law. Another area where the presence and input of a lawyer should be taken is that of estate planning. A competent lawyer can handle the creation of wills, power of attorney and trusts.

Also Read:

Inculcating financial literacy in kids the fun and money-wise way

Of Rising AUMs, Mutual Funds and Why you cant have instant noodles

5 bad investment habits you should give up in 2018

Amar Pandit, is a Chartered Financial Analyst and the Founder, Chief Happiness Officer at HappynessFactory.in

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