How do I choose the best financial planner this year?

best financial planner

Many people feel that they need a financial planner only if they have extra money. They also think that the financial planner is necessary for tax payments and calculations. Unfortunately, they are wrong. Financial planners are required even when you do not have excess money because they can help you make ideal use of your money. They allow you to create the excess returns from your investments and help enhance your overall net worth. But, how do you select the best financial planner? Here are some tips that can help you do so.

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Who is a financial planner?

As the name itself suggests, a financial planner is a financial expert who can help plan your finances better and achieve your financial objectives. However, it is not easy to choose the best financial planner because it depends on various factors. Therefore, let us discuss the critical aspects to focus on when selecting the best financial planner.

● Know which area you need help in financial planning.

Knowing your financial goals and objectives is better before searching for the ideal financial planner. So, the first thing to do is ‘Self Introspection.’

  1. Start by listing out your finances and the options available before you.
  2. Know your priorities.
  3. Decide which area you wish to invest your money in. It could be planning for retirement, tax savings, capital gains tax treatment, insurance investments, etc.

Once you know your priorities, you can search for the best financial planner.  

best financial planner

● Shortlist the financial advisors in your stream and know their strengths.

We advise making a list of financial planners available in your specific sphere and understanding their strengths. For example, an expert in income tax might not necessarily be good in investment matters. Likewise, not everyone is aware of capital gains issues. Generally, you have the following three types of financial planners.

  1. The traditional planner – These financial advisors have experience handling various economic issues. They can prove helpful in directing your investment in the conventional areas of investment and personal finance. You can meet them in person, explain your needs, and get a proper solution.
  2. The Online financial planner – The online planners can be less expensive than the traditional planners, but they might have their areas of expertise. Usually, such planners offer virtual advice. The problem with such planners is that they are not available in person. Therefore, you must be able to convey your needs properly online because their advice depends on what and how you tell it.
  3. Robo Advisors or Chatbots – Today, you have a new breed of financial planners known as Robo Advisors or Chatbots. These impersonal planners work on high-level algorithms to construct an investment portfolio, depending on your requirements and risk appetites. The main issue with such planners is that you do not interact with humans and thus, rely on artificial intelligence. Such advisors can be OK in the ordinary course, but they cannot handle complex situations. However, these advisors are the most cost-effective.

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● List the services you require from the financial planner.

Since you know your objectives and have seen the different types of financial planners, you can list the services you like to get from the planner. Financial planners can have better ideas in your areas if you list out your needs correctly. For example, you might look for retirement planning. They might help you with insurance plans that provide a pension and insure your life simultaneously. Similarly, if you are looking for a life insurance plan, the financial planner can also help you with health insurance.

If you are looking for mutual fund investments, the planners can help you with different mutual funds, including debt funds, equity funds, hybrid funds, index funds, etc. On the other hand, if you like to go for direct bank deposits, the financial planner can suggest a better alternative in the chit funds.

● Finally, enquire about their fee structure before finalizing the deal.

Please ascertain the fee structure and decide whether you can afford their services because some financial planners can be very expensive. Previously, they used to charge a percentage rate. Now, the general trend is to quote a flat rate. So, please finalize your budget and decide how much you can afford to pay. Then, you can select the best financial planner and start investing in getting the best ROI.