7 tips to identify a loyal investment advisor
A true investment advisor will help you build various aspects of your financial personality
As an Ultra High Net Worth Individual (UHNI), it's imperative to be extra cautious while hiring an investment advisor.
Imagine going to a desert and standing on top of a sand dune. Surrounded by dunes – each indistinguishable from the other – we realise it’s ridiculously easy to get lost here. The wind makes it impossible to trace back our own footsteps. In the heat and desolation, we might be reminded of our primal past and our childhood fears of being lost and alone. But with a guide beside us, we begin to enjoy the splendor of the same unforgiving desert. We are rest assured that he will navigate this terrain and lead us to hidden oases.
Come to think of it, the role of the true financial advisor is like that of the desert guide. The terrain of the markets can be terrifying. Winds of change sweep across the market constantly. Like sand dunes, financial instruments can become indistinguishable from one another. We may think we know the path to the oasis of profit, but we don’t have the expertise to differentiate between an oasis and a mirage. But with an able and trustworthy financial advisor to guide us, we can breathe easy and enjoy this rugged journey.
Needless to say, it's important to hire a proficient guide before stepping into the desert. Most UHNIs reach this point when they realise that they can no longer manage their quantum of wealth without overburdening themselves or getting distracted from their career goals. If you have reached this point yourself, then you might want to ask any potential investment advisor the following questions:
Contrast this with a model where the investment advisor recommends products that are fully aligned with your risk appetite and cash flow needs. In this scenario, he gets absolutely no commission for selling these products.
This question is more about the organisation that the advisor represents. Supplementary questions here can be as follows:
» What values does the organisation stand for?
» Can you get an in-person testimonial from another client whose profile is similar to yours?
» Do his incentives depend on how much business you give him/ her or how satisfied you are with the overall portfolio management?
» Can you get a cost break-up for his services so that you are assured of zero hidden costs?
» How many clients does a typical investment advisor in his organisation handle? If you make a request, what’s the turnaround time?
Besides, do they have the resources to take care of the nitty-gritty? Filing tax returns and tracking dividend payments might be petty tasks, but they need to be done in a timely and efficient manner.
An ideal investment advisor takes the time to know you. He will be acutely aware of your pain points and your personality. The number of times he contacts you will be neither more nor less than you desire. And he will never approach you with a product that will make you roll your eyes.
As an UHNI, you must have spent a lifetime cultivating various aspects of your overall personality. A true investment advisor will help you build various aspects of your financial personality. His job is to help you grow your wealth. While doing so, he will also help you leverage wealth to maximise benefits to society, family and your core inner self.