Category: Financial Planning

What should you expect from a financial planner

You search for a financial planner on Google, and it returns you lakhs of pages as an answer. How do you know which one to choose? Or which ones are reliable and have enough credibility? In this world of “Expertise” where information is floating everywhere for free, it’s hard to differentiate the real and the fake. So, read on our post on Who are financial planners and what to expect from them.

Differences Between Stockbrokers, Investment Advisors, And Financial Planners

As Investopediasays, all three designations/profile are different. However, people tend to get confused –


Stockbrokers, also called registered representatives, are regulated professionals who make trades on behalf of retail and institutional clients in exchange for a fee and commission.

Investment Advisors

Investment advisors are individuals (known as Investment Advisor Representatives, or IARs) or companies that provide advice about securities to clients. Investment advisors receive compensation for providing information regarding various investment products including stocks, bonds, mutual funds and exchange-traded funds (ETFs)

Financial Planners

Financial planners help individuals and corporations meet their short- and long-term financial goals by evaluating each client’s current financial status and developing a program to meet his or her objectives.

3 Significant differences between a Financial Planner and an Investment Advisor

We were asked by one of our clients, who showed us the card of an Investment Advisor – Why are there ahuge difference between the rates quoted by your firm and the one mentioned in the card.  We explained him the three main differences that exist between a Financial Planner and an Investment Advisor –

1. Investment Advisors Get Paid for the Advice – As the name says the advisors charge only for the suggestions/advice made by them. On the other hand, a financial planner would plan an individual’s investment or analyze his portfolio and make necessary corrections that come with some price.

2. Financial Planners cover a diversified portfolio – A certified financial planner [CFP] would necessarily need to plan for different subjects like –

  1. Financial statement preparation and analysis (including cash flow analysis/planning and budgeting)
  2. Insurance planning and risk management
  3. Employee benefits planning
  4. Investment planning
  5. Tax planning
  6. Retirement planning
  7. Estate planning

3. A Financial Planner Helps you in Customization – Based on your life goals or aspirations, a financial planner would customize your portfolio. On the other hand, an investing advisor will match you with a similar kind of profile based on the risk appetite and would suggest you same kind of investments plans.

If you are hiring a financial advisor it’s good to ask following questions to the person –

  1. What’s the model followed – commission or fees model or a combination of both.
  2. What all services could one expect? – Would you just receive an investment advice or the advisor would also provide you with a complete evaluation of your financial portfolio?

  3. What kind of risks are involved? –Given the nature of theinvestment, it would be good to know what all risk you would be exposed to.

6 Key Value Propositions a Good Financial Planner Can Provide for Clients Seeking a Better “Return onLife.”

In the context of a goal of improving a client’s “Return On Life” (ROL, as opposed to the traditional approach of trying to improve the client’s portfolio ROI), Mitch Anthony suggested that the six key value propositions of financial planning that should be provided are –

  1. Organization. As a financial planner, we bring order to your financial life, by assisting you in getting your financial house in order (at both the “macro” level of investments, insurance, estate, taxes, etc., and also the “micro” level of household cash flow).
  2. Accountability. We will help you follow through on financial commitments, by working with you to prioritize your goals, show you the steps you need to take, and regularly review your progress towards achieving them.

  3. Objectivity. We bring insight from the outside to help you avoid emotionally driven decisions on important money matters, by being available to consult with you at key moments of decision-making, doing the research necessary to ensure you have all the information, and managing and disclosing any of our potential conflicts of interest.

  4. Proactivity. We work with you to anticipate your life transitions and to be financially prepared for them, by regularly assessing any possible life changes that might be coming, and creating the action plan necessary to address and manage them ahead of time.

  5. Education. We will explore what specific knowledge will be needed to succeed in your situation, by first thoroughly understanding your situation, then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice.

  6. Partnership. We attempt to help you achieve the best life possible but will work in concert with you, not just for you, to make this possible, by taking the time to understand your background clearly, philosophy, needs and objectives, work collaboratively with you and on your behalf (with your permission), and offer transparency around our own costs and compensation.

The Challenge: How to Benchmark Your Investment Portfolio

After a certain duration, you tend to get curious if your portfolio is good enough or is it time to make some amendments or need some expert help. So how do you decide? How do you know if your advisor is making the informed suggestions? Here are some handy tips

  1. Get Benchmarking – Benchmarking or A standard or point of reference against which things may be compared or assessed.Many advisors provide a quarterly report highlight how far have the investments gone when compared to the benchmark.
  2. A Blended Benchmarking – With investments made both in stock and debt it would be good to evaluate your benchmarking tools both the instruments.
  3. No Change in Middle – If your advisor is suggesting you to change your benchmark midstream, do not do so. A benchmark adopted at the start should continue until the end is what experts recommend.

  4. Keep Your Questions Ready – Many times these benchmarks do not provide you with clear answers, so do not hesitate to shoot questions like – Are you on track to meet your child higher education goal? Or Do we have enough money for our retirement?

  5. Get a Clear Picture about the fees – If the benchmark shows a 2% growth and the fees charged by the advisor is 4% it does not seem to be a rosy picture. So get a clear idea on what are the charges and the breakdown.

What to expect from a financial planner, and how to find one

So, now you know “Who the Financial Planner is” but how could you choose one for yourself? Here are few handy tips –

  1. Make sure to go for one who is a certified financial One that has agold standard from a certification body like financial planning standards board of India.
  2. Make sure that planner is fiduciary
  3. SEBI Registered Investment Advisors are a new category of advisors that provide investment advice for a fee. There is no conflict of interest and they maintain arms length between advisory and other activities.

  4. Get a verification check of the planner if possible

  5. If possible get references of the planner, google about her, testimonials. Do not fall for the gimmick of “higher returns.”

Building a robust investment advice process

The financial planner would need to have a streamlined investment process that could provide his clients with results and visibility. Here are the key ingredients of the process that could be followed –

1. Know Your Client

  1. Review your client’s financial position
  2. History, values, transition goals
  3. Goals-based planning

2. Develop a plan

  1. Categorize and evaluate
  2. Determine risk/return requirements
  3. Develop a written plan

3. Construct portfolio

  1. Strategic asset allocation
  2. Sub-asset allocation
  3. Passive/active mix
  4. Asset location
  5. Manager selection

4. Implement plan

  1. Best execution
  2. Tax efficient trading
  3. Automate rebalancing

5. Monitor progress

  1. Periodic financial check-ups
  2. Significant life events
  3. Review progress

Evaluating Post-Retirement Investment Strategies

If you are looking for the Post Retirement Investment strategies, check out exclusive post about that – here

We hope we have answered your queries what should you expect from a financial planner.If you still have any unanswered questions or need help, feel free to contact us here.

We would be glad to help you with your planning and investment related decisions.

Samiksha Seth

Content Strategist Dilzer Consultants Pvt Ltd