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Who should be on your Money Team

Monday, July 09, 2018
By Amar Pandit

Amar Pandit, Founder & Chief Happiness Officer, Happyness

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 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.

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.

How should I choose a Financial Planner/Advisor?
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.

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.

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.

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 book-keeping, preparing and filing returns, tax audit, tax planning, etc. 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.

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.

Insurance agent
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.

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.

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