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Questions to ask before choosing the right or best financial advisor

by Tavaga Invest

It’s all about education & awareness when it comes to finances. Financial literacy plays a vital role in any individual’s life who wants to reap the benefits of higher returns through budgeting & investing. Thanks to high internet penetration there has been a dramatic increase in financial services platforms in India that are making a lot of noise to educate people on financial management. There has been a surge in the number of Demat accounts opening in India in the last two years. The number grew from 35.9 million in 2019 to 55.1 million in 2021 and 73.8 million as of 31 October 2021. Many new investors are entering the stock market landscape. 

The big questions that come to light are “Are people well educated on how to invest their money?”, “Do they know the risks of the market?”, “Do they know how to pick the right stocks?”, “Are they aware of Portfolio diversification?” 

We know that the number of investors is increasing rapidly but not the financial literacy rate of India. In India, only 27.6% of the population is financially literate which means there is a large pool of people who are not educated enough to know the answers to the aforementioned questions. These people are either consulting qualified Investment Advisors or are managing their own money. 


In recent times Government has put forward many initiatives toward financial literacy. However, This sort of literacy is based on difficult math, which typically takes specialized instruction to understand and master which is difficult for normal investors. Yet we don’t find people consulting RIA.

One of the issues, we believe, is that while there are numerous efforts to assist individuals to improve their financial literacy, there isn’t as much attention on making it easier for people to reach those who already are experts in the field — financial advisors.

We know that finances can be complicated & very personal.  Therefore, everyone should be careful and well aware of who they choose as their advisor. 

Important questions to ask to your financial advisor

Questions to ask before choosing the right advisor

1. What is the Qualification of the advisor?

When we are planning to get advice on how to invest our hard-earned money it is better to get it from an expert. In India, SEBI is the regulatory authority for financial markets & services. SEBI mandates every individual/entity providing financial planning services to be registered with them. Hence it is advisable to consult a SEBI Registered Investment Advisor.

2. What Value addition will they be doing? 

You should ask how the advisor is adding value. An advisor should have investment knowledge, which means they will most likely assist you in developing and implementing an investment strategy & not just in finances a financial advisor can also help you figure out how much money you should be saving, how to plan for your goals, and where you might be able to get tax benefits. Hence whatever advisor you may choose they may help you reach your goals quickly & easily with less money. 

3. What is the specialization of the advisor?

Advisors may have different specializations some may only advise on retirement planning, others may be experts on tax benefits & yet others may have the most expertise in working with young professionals or small organizations. It is important to know what your financial goal is and then seek an advisor who is an expert in that area.

When your needs and the advisor’s expertise are in sync, you’ll have a better chance of establishing effective solutions to reach your goals. 

4. Are your goals & priorities the same as your advisors? 

One’s financial goals change over time. What is important right now may not be relevant a few years later. Hence your financial advisor must be aware of what your goals are right now. His financial plans should focus on prioritizing & achieving your goals keeping in mind your risk appetite.

5. Do they have a fiduciary obligation towards you?

Your financial advisor must commit to you in writing that he/she will have a  fiduciary duty. It means they have to behave in your best interest above anything else. Sometimes it may happen that the advisor’s interests may not align with yours & hence to solve this conflict of interest you should ask for a written fiduciary obligation.

6. How will I pay for your services?

There are various methods to pay for financial counseling. The service may charge an hourly rate or a flat price. You may be able to pay a retainer charge (sometimes known as a subscription fee) for the services of a CFP® professional on a monthly or quarterly basis. You may be charged a portion of the investable assets that your financial advisor handles on your behalf i.e. percentage of AUM. Your advisor should make it clear how he or she expects to be compensated for the services provided.

When choosing a financial advisor you must be cautious. A good financial advisor assists customers in developing a healthy relationship with their finances and accomplishing their financial goals in the most efficient way possible. On the other hand, a lousy advisor may cause the client to lose faith in the financial system. It’s advisable to get assistance from SEBI-registered investment advisors who are qualified and provide unbiased investment advice.

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1 comment

tejaspatil July 29, 2022 - 6:26 pm

Correct. It is important to ask questions and get the best financial advisor for you. If you have doubts in your head, you will never be able to trust the advisor completely. So, ask questions and be sure of the advisor for trading.


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