I get this request very often. Maybe 100 times in a year if not more. I do train a lot of IFAs and bank RMs, so I should be able to connect the two, right? Wrong. I am myself not sure about who to recommend. I can name some very knowledgeable people here who I think do not know many things about financial planning. Many of them have rendered free, irresponsible advice on the net or otherwise, but have not held a client’s hand through bad times. I would consider them completely useless for me to recommend – for a fee or free. So I will surely not name anybody, that is NOT my job. So what’s my peeve?

Sometimes when they are asking me for a recommendation for an adviser, they are asking – me something hidden too. ‘Will I be able to use some brains, discipline, knowledge and DO IT MYSELF? I rarely recommend advisers, but have dealt with many of them, It is pretty easy for readers to see that I do not engage anybody else to do my financial planning or asset management.  I do have a small mutual fund portfolio, but have chosen them myself. You may say, “but you’re Subramoney! Of course you don’t need a financial adviser.” Agree partially. I do use a broker who is my adviser, sounding board, and executor of transactions. Yes he is paid on the percentage of the amount invested, and yes he makes more money if I do transact more. Yes, the turnover benefits him a lot. However, do remember this relationship is now 38 years old – and is obviously time tested. No, he is not looking for business.

Fairly obviously, you need not know everything that I know for you to take care of your portfolio. There are things which I know which you do not need. You need not be trained as a lawyer or pass a few accountancy exams. You need not know promoter behavior, if you are going to invest in mutual funds only. You need not know how to draft a will, or how to construct a portfolio. If you are happy investing in 3 fund schemes (I have exposure to just 3 fund houses), you need not know anything about other fund houses. Frankly I would not have bothered except for other things that I do.  I do not know about the Post office schemes, senior citizen schemes, etc. – except that I would know whether they are taxable or otherwise. I know nothing about buying disability or health insurance. I know nothing about borrowing or repaying. I know nothing about bad credit scores – I do not even know how to borrow (or make a CV!).

Like me you should be lucky to make ALL your mistakes when you are young, and learn fast. Tons of patience to sit tight after having bought right. Understanding the parabola of compounding was perhaps the smartest (luckiest?) thing I did. Hopefully by the time you are in your 50s and are faced with a market downturn, you have learnt what to do. Maybe you have the resilience learnt when you were in your 30s. Perhaps you had faced your first down turn in your 30s with a portfolio in 5 digits. Now you have learnt how to handle a 8 digit portfolio that is knocking on the 9th digit.

If I were to look for an adviser what would I do?

1. Look for a good adviser – make sure that he has about 10-13 years of RELEVANT experience. Do not pick a banker who has gone off on his own – he may have just a few months experience. He may have been sacked by the bank and this could be a temporary career diversion.
2. Look for a person who has been in this business for at least 10 years, and is speaking passionately about the profession. If he is tired, bored, demotivated – there is a good chance that he will walk out of the profession.
3. Is he enjoying what he is doing? If yes he is likely to be in this business long enough.
4. Look for relevant education – remember there is an alphabetic soup in the education – CFA, CFP, CA, BE, Mbbs, IRS, ….name it. A person without the relevant education may have done well for himself – but has no experience (or education) of handling complicated matters. So if a person has no learning or experience, he is going to learn with your portfolio. You do not wish to be a guinea pig do you? What if he drafts a will that goes into litigation? It is scary.
5. Does he have a client base? ask him for the same and pick 4 people at random – and ask him if YOU can talk to them asking …
6. A fiduciary – he should tell you all the money that he is making…
7. If your investible funds are more than Rs. 75L, it is worth doing a fee based adviser. Till then it might have to be a commissioned adviser. This is a slippery wicket..and will not entertain comments on this
8. Tell him that if you were to go to him just for advise would his answer be different from what he has suggested
9. Make sure he is not pushing any specific product.

I am sure there are many more…but lets be happy with this note?