Investment in mutual funds can be tricky, and if you’re a first-time investor, it may make sense to choose a financial advisor who can help you. Centrik guides you on how to pick one:
- Advisor’s qualification
The way one checks a doctor’s qualifications and experience before a visit, it is important that your mutual fund advisor is qualified and has good knowledge of the subject. An MF advisor should have good knowledge of different asset classes such as equity, fixed income and gold.The person should be able to assess how these asset classes will be affected by national and international developments, besides being able to identifying products that will meet your requirements as the years go by.
- How professional and accessible is an advisor?
It is important for an advisor to be professional and accessible. The advisor, and the team the person works with, should be able to answer your queries in a reason able period of time and should be accessible. The expert should be able to execute your investments in a short turnaround time.
- Can your advisor offer comprehensive services?
Most people don’t want to discuss finances and their personal life with too many people, as it means having to explain the same things again and again. They would rather trust an advisor to handle their investments with confidentiality. So, try and choose an advisor who is unbiased, can offer you mutual fund products from all the fund houses and not just one or two funds.
- Advisor’s track record
Unfortunately, there is no formal rating or ranking system for mutual fund advisors in India. Hence, the most popular method of choosing an advisor is through referrals. Use social media websites to understand if anyone has recommended the advisor or his firm. That will give you some idea of his strengths. Check online for referrals, ask around for references. Find out for how long the advisor has been in business and his style of operating.
- How is an advisor compensated?
A good advisor needs to be com pen sated well. Find out whether your advisor uses a distribution model, where he gets commission from the fund house for every investment you make through this person. Alternatively , some advisors charge you a fee for the service, depending on the time they have to spend with you. There are many portals that can help you make a financial plan by gathering data from you and it could be free. There are also seasoned financial planners who could charge a fee ranging from Rs 5,000 to Rs 25,000 for making a comprehensive financial plan, which takes into account your risk-taking ability, future needs and life goals.