When to call in a financial advisor?

Shikha has just completed 12 years as a broker. She looks back on her career and her accomplishments with satisfaction. However, her financial situation makes her anxious. She has been saving and investing for a long time and owns just about everything from a PPF account to direct stocks and derivatives. She hasn’t had time to organize her finances, although she knows how important it is. What can she do?

Shikha represents a large segment of well-paid professionals who have neither the time nor the inclination to fill out paperwork and manage their financial affairs. Shikha needs a financial advisor who can work for her. Before hiring someone to take care of her finances, she should be clear about the tenure she has and the terms under which she would like her money to be managed.

First of all, it must collect all the information relating to its investments and insurance. His investments can be found in several folios and accounts. She should have her advisor write to all of her participating mutual funds, banks, registrars, brokers, and custodians for information about her holdings. Quoting her PAN and email details will help her even if she can’t remember her account numbers and folio numbers. The advisor should be asked to follow up and allow their request for information to be processed, providing any additional data needed to complete the process.

Second, a consolidation and a review of the portfolio must be carried out. The advisor must then evaluate the portfolio for its current value, calculate the return obtained and also summarize the evolution of each of the investments. This portfolio review should help him decide what to keep, what to close and what to consolidate.

Third, after estimating the current value of the portfolio and gathering all the details, she should sit down with her advisor to decide how the portfolio would be managed going forward. The advisor can take a detailed financial planning approach, depending on their financial goals, life stages and risk profile. Or he may simply choose an approach to building wealth based on an agreed return at an acceptable level of risk, for a given period of time.

Payment to the advisor should be based on mutually agreed terms and subject to process completion and portfolio review.

The content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

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