5 tips to build your relationship with your financial planner

You always keep hearing about what to look for in your financial planner before choosing one but no one seems to be talking about similar qualities that investors must possess. Sure, the planner is the one who is offering services to you and so you reserve the right to choose one which you find suitable but what kind of investor are you for the financial planner ?

If your expectation is that the planner is top notch and the best crawling creature the world created, can’t the planner assume the same about you ? A take on five tips you can use to build your relationship with your financial planner.

1. Set your expectations right about what is on offer

This is where many investors falter. A financial planner or investment advisor isn’t a person who is going to generate 15% returns for you year on year till your coffers overflow.  He is not a magician who can come up with multi baggers of stock ideas or is going to wake you in the middle of the night to talk about a wonderful product that was launched yesterday.

An investment advisor will look at your financial condition, assess it, suggest changes and create a blueprint of how you can meet all your aspirations in life. In that sense, he is going to ensure that you meet all your financial goals in your life via goal based investing. Period. Nothing more, nothing less.

It is true that some planners do offer services beyond financial planning but that is prevalent in the Western countries – I am not aware of planners in India walking your dog or booking your flight tickets ! The onus is on you as well to make sure you know what will be offered by the planner.

If the expectations are set right the first time, delivery of services will never be questioned in the future.

2. Read and understand the subject of personal finance

What do you do before you go on a vacation to a new place ? You chalk down the places to visit, the road to take, the places to stay and eat at. So you do put effort to know about how you can enjoy and best spend your money at in the new place.

Same with personal finance. You need to at least have some basic knowledge about investments, risk and return, insurance, inflation among others. This puts you in good stead to pick up a healthy and intelligent conversation with your advisor. It will also increase your knowledge over a period of time.

Investors ought to get their financial planning basics right and understand what long term investing is all about so that they know why the planner is advising the way he is.

An intelligent conversation always helps build a strong relationship as both the parties know that they understand each other well.

3. Don’t bargain for fees

You don’t bargain when you go to a lawyer or a doctor, you also don’t expect them to be at your place for each and every discussion so why expect the same from a financial planner ? Bargaining on service fees is every Indian’s favourite past-time and we like to haggle right from the sabji-wala to sight seeing the Taj Mahal but if you bargained and feel good about it, don’t whimper if the Taj was shown to you from the front side only.

This kind of links to the first point I made. If you set your expectations right before the beginning of the engagement and are happy about it, where does the question of fee negotiation arise ?

When you negotiate, you might feel good and victorious but you have already questioned the services of an industry that has high entrance barriers, good ethics and the highest quality you could ever imagine on financial planning. That is not done.

4. Mistakes can happen, to err is human

As an intelligent investor, you need to understand that if investment products were recommended and are not performing upto the mark, why is that so. For example, the stock market has been acting naughty for the last few years now. Investors sticking to systematic investment planning of mutual funds are really not happy but who is to blame ?

If you think it is the advisor, then its wrong. There will be some events, and I call them events because events happen very few times, when you will go off track on your road to financial freedom and you need to understand that the event is out of the control of your investment advisor or for that matter anyone.

Then there could be genuine cases when your advisor has faulted and has owned up and corrected the mistake. As an investor, you should understand the goof up has not set you back by millions and as long as that is the case, you should be ok with it.

Someone once asked me – as a financial planner, what is your measure of success ? The question caught me off guard but my reply was to ensure that investors meet their goals. As long as you meet all your goals, you should be happy with what your planner is doing for you.

5. Discuss things other than personal finance

Your rapport with your planner can be taken to the next level if you reach out to him to discuss things which will ease your relationship with him. What does he like ? What are his hobbies ? Does he watch the Indian Premier League – you get the drift, don’t you ?

I always reach out to my clients to talk about THEM. The same holds good for investors. Cementing a relationship on personal grounds ensures that both of you are very comfortable working with each other – nothing can then shake such a relationship. When that happens, you see beyond mistakes and are ready to work together come what may.

Remember that you don’t want to change your planner each year so the right mix of personal and professional relationship is most important.

What are your thoughts and comments on how to build your relationship with your financial planner ?