How to Choose your Financial Advisor? Top 3 Factors To Consider

By
Hemant Beniwal
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41
How to Choose your Financial Advisor? Top 3 Factors To Consider

Last Updated on April 23, 2026 by Hemant Beniwal

A client walked into my office a few years ago. He was 52, worked at a senior position in a Jaipur-based manufacturing company, and had been “investing” for 20 years. His portfolio had six ULIPs, three endowment plans, one pension plan from an insurance company, and a handful of mutual funds someone had recommended at a party. He had no term insurance. No health cover beyond his employer policy. And his retirement was eight years away.

His financial advisor had been his cousin who sold LIC policies.

This is not an unusual story. In India, over 50 lakh people sell financial products of one kind or another. Finding someone who calls themselves a financial advisor is easy. Finding one who actually deserves that title is a different matter entirely.

Quick Answer

A good financial advisor must pass three tests: Are they comprehensive (do they look at your full financial picture)? Are they independent (is your interest truly their only interest)? Are they competent (do they have the education, certification, and experience to back their advice)? Most people who call themselves advisors in India fail at least one of these. Here is how to tell the difference.

The Real Problem With Most Financial Advisors in India

The low entry barrier for selling financial products in India has created a massive supply of people who wear the advisor label but function as salespeople. An insurance agent is trained to sell insurance. A mutual fund distributor is trained to sell mutual funds. A bank relationship manager has monthly targets tied to specific products.

None of these are advisors in the true sense. They are product distributors operating under the advisor label.

Someone once said: “To a man with only a hammer, every problem looks like a nail.” That is precisely what happens when you go to an insurance agent with a retirement planning question. You get an insurance policy. When you go to a mutual fund distributor with a tax saving question, you get an ELSS fund. The product always fits the seller, not the buyer.

SEBI recognized this problem and created the Registered Investment Adviser (RIA) framework to distinguish genuine advisors from product distributors. But awareness among investors remains low. Most people still do not ask whether the person sitting across from them is an RIA or a distributor, and the difference is enormous.

Factor 1: Comprehensive

Your financial life is not a single product. It is a system with multiple moving parts: income, expenses, debt, insurance, investments, tax, and eventually retirement. A good advisor looks at all of it before recommending anything.

Have you ever had an advisor ask you about your emergency fund before suggesting an investment? Has anyone ever told you to repay a high-interest personal loan before starting a SIP? Has your advisor ever said “you do not need a new product right now”?

If the answer to any of these is no, you may not have a financial advisor. You may have a product seller with a business card.

The principle that guides genuinely comprehensive advice is this: every client is different. A 52-year-old PSU executive with a pension cannot be advised the same way as a 45-year-old entrepreneur with irregular income. The same asset allocation, the same product, the same plan cannot work for both. Real advisors do not fit people into pre-tailored solutions. They build the solution around the person.

What comprehensive advice actually covers:

  • Term insurance adequacy before any investment conversation
  • Health insurance coverage for the family including parents
  • Emergency fund status (3 to 6 months of expenses, liquid)
  • Existing debt and the cost of that debt vs. investment returns
  • Tax planning integrated with investment planning
  • Goal-based investment allocation, not just product recommendations
  • Retirement corpus calculation and withdrawal strategy

If your advisor has never discussed even half of these with you, something is missing.

Factor 2: Independent

This is the factor most investors skip entirely because it feels uncomfortable to ask. But it is arguably the most important.

When your advisor is recommending a product, whose interest is driving that recommendation? Yours? Or his monthly target, his annual bonus, or the foreign trip his company gives for hitting a sales number?

An advisor who works for a bank, brokerage house, mutual fund company, or insurance company has a structural conflict of interest. His employer pays his salary. His employer’s products get recommended. This is not about individual character. It is about incentive structures. Even the most well-meaning advisor finds it difficult to consistently recommend what is best for the client when his income depends on recommending what is best for his employer.

The question to ask directly: “What is your earnings model? Do you earn commissions on what you recommend to me?”

A good advisor will answer this clearly and without defensiveness. The answer itself is less important than the transparency. An advisor who cannot or will not explain how they earn is an advisor you should think twice about.

Also ask: is this a long-term relationship or a transaction? The best advisors in India build relationships that span decades. They are there when markets crash, when your job changes, when your children’s education needs arise, and when retirement finally arrives. If your advisor only calls when a new product is being launched, that tells you something.

Something Worth Noticing

In 25 years of practice I have seen a consistent pattern: the clients who got hurt the most financially were not the ones who made bad investment choices. They were the ones who had the wrong advisor for too long. A mediocre investment with a good advisor beats a great investment with a self-interested one. The advisor relationship is the most important financial decision most people never consciously make.

Factor 3: Competent

Warren Buffett once observed that Wall Street is the only place where people in Rolls-Royces take advice from people who ride public transport. The Indian version of this is equally common. Stock tips from terminal operators. Retirement advice from fresh management graduates who joined a bank three months ago. Insurance planning from agents who have never done a financial plan in their lives.

Competence in financial advising requires three things: education, certification, and experience. All three matter.

Education and certification tell you that the advisor has invested in learning the craft. In India, the CFP (Certified Financial Planner) designation from FPSB India is the most recognized mark of financial planning competence. An advisor who is also a SEBI Registered Investment Adviser (RIA) has met the regulatory requirements for giving fee-based advice. These are not guarantees of quality, but they are meaningful filters.

Experience tells you how the advisor has performed across market cycles. Anyone can look smart in a bull market. The real test is what they did for their clients in March 2020, in 2008, and in 2022. Ask them directly: “What did you advise clients when markets fell 40% in 2020?”

A practical way to evaluate any advisor before committing:

  • Ask for their SEBI RIA registration number and verify it on the SEBI website
  • Ask about their CFP or equivalent certification
  • Ask how many clients they work with and what the average relationship tenure is
  • Ask them to walk you through a sample financial plan they have made (with names removed)
  • Ask what they would have advised a 55-year-old equity investor in March 2020

There is nothing wrong with asking these questions. Any advisor who gets uncomfortable when you ask them is telling you something important.

Why This Decision Matters More Than Any Investment Choice

Most people spend more time researching a mobile phone than they do choosing a financial advisor. And the mobile phone will be replaced in two years. The financial advisor relationship can shape the next 30 years of your financial life.

The numbers bear this out. Research on investor behavior consistently shows that the gap between what markets return and what investors actually earn is driven largely by behavioral mistakes: buying at peaks, selling at bottoms, chasing last year’s returns, abandoning good plans when markets get uncomfortable.

A good advisor is the person who stops you from making those mistakes. Their value is not in picking better funds. It is in being the voice that says “do not touch this” when you most want to. That is worth more than any particular product recommendation.

[CLIENT STORY: Share a specific example of a client who almost made a catastrophic decision at a market bottom and how the advisory relationship prevented it]

A Simple Checklist Before You Choose

Before finalizing any advisor, run through these questions:

  • Are they a SEBI Registered Investment Adviser? (Verify at sebi.gov.in)
  • Do they hold CFP or equivalent certification?
  • Can they explain clearly how they earn from your relationship?
  • Do they ask about your full financial picture before recommending anything?
  • Have they been practicing through at least one major market crash?
  • Do they have clients who have been with them for 10 or more years?
  • Are they willing to tell you when you do NOT need a new product?

Finding the right advisor takes time. But this is one search that pays for itself many times over. A bad advisor can quietly destroy decades of savings. A good one can be the most valuable financial decision you ever make.

Not Sure If Your Current Advisor Passes These Tests?

A 30-minute conversation can tell you a lot. We work with senior executives aged 45 to 60 who want a second opinion on their financial plan before retirement. No sales pitch. Just an honest look at where you stand.

Book a Free 30-Min Call

Related Reading

Before You Go

If this resonated with you, also read: Mis-Selling Tricks by Mutual Fund and Insurance Agents and Importance of Financial Planning in Your Life.

Have you had a good or bad experience choosing a financial advisor? Share your story or leave it in the comments below.

One question for you: What was the single biggest factor that made you trust or distrust a financial advisor? Share in the comments below.

41 COMMENTS

  2. Sir,
    I am a retired person. I have to undergo by-pass surgery and cost of it around 4 lakhs. I have mediclaim of Rs. 2 lakhs from employer for ex-employee and wife also has mediclaim of Rs. 3 lakhs. Can I use both the mediclaim policies? and if yes, can I avail the cashless facility from both the policies? Pl note, both the mediclaim policies are from difference insurance companies.
    Best regards
    Madhusudan

  3. diffrence between FPSB india course certified financial planner and insurance institute of india cours CPAIM- certification programe of advance insurance marketing, which has more value.

  4. Respected Sir,
    What is your view on Quantum Mutual Fund? I want to add Quantum Long Term Equity fund Sip In my Portfolio. Please Give me your suggestion.

  5. Hi hemant,
    This is santosh my monthally salary is 50,000. i can invest 9ooopm through Mf.
    i have started investing three fund.
    HDFC top 200 1500
    ICICI Prudential Focused Bluechip Equity Fund – Retail – Growth 1500
    SBI Emerging Businesses Fund-Growth 1000
    I have one daughter three month old How do i plan for her education Can i take education plan or mutual fund.
    For my retirement how do i make investement plan.

  6. Hi Hemant Ji,
    I am in Govt job , have monthly take home salary of 95,000/-
    I have recently invested in property under subvention plan.For which I had applied for loan of 38,00000/-for 20 years. Total cost of property is around 52,00000/-.I had done payment of 7.5 lacs. This property is under construction and possession will be offered after 3 years.I dont have to pay EMI for next 24 months as per subvention plan. After that EMI will start.
    My query is should I invest my savings in Mutual fund for 2 year and after 2 years once the EMI start, I will remove money from MF and prepay some of the loan so that EMI will be less or loan duration will be reduced.
    What should I do??
    Thanks in anticipation!!

  7. Hemant,

    Thanks for the clarity that you have been providing on investments !!

    Can you me help me finidng a fund manager contacts in chennai ?
    I have my financial planning done but unable to find a fund manager/broker for getting to know various schemes to start with and manage them.

    Plus, would like to know the best/leading insurance companies for the following :

    Mediclaim: for family floater
    Debt linked schemes on monthly investments
    Gold fund Savings schemes

    Thanks !!

  8. HI,

    I AM 34 YEAR GUY I AM WORKING IN PVT FIRM EARNING 25K SUGGEST ME INVESTMENT PLAN I INVEST 4000 PER MONTH THAT CAN GIVE ME 1CR IN 18 YEAR PLEASE GUIDE ME

  9. Hi,
    I am a 24 years guy who recently joined in a Govt organization(Going to complete one year). I am earning 23k per month. I am investing around 7k per month in various savings(RD, LIC, PPF, NPS(Tier-II)). I can stretch 2k more.

    I have a aim to buy a home. I just want to know which is the best savings monthly plan to achieve my aim.

  10. Hi,
    I am an NRI and i would like to set my investments in indian. I have some insurances but i would like some help in investing in the right places etc….

  11. Dear Mr.Hemant

    Very nice article, i am 44 year old , having diabetes from 4 years but under absolute control, looking for term insurance, pl suggest which plan i go to, which is the best comapny which will not disallow the claim on a/c diabetes, also let me know wheter should i discolse the disease during taking plan or no

    i am confused please help me

    Regards
    Pramod shinde Mobile : 9867100000

  12. Hello Hemant, this is not just a question so if you could reply…please do so :
    I am a commerce graduate. Later I did MBA in Finance & Personel thru correspondence.
    I want you to help me understand if I can learn more on this subject : Financial Planning ? If yes, then please provide guidance to proceed in this direction.

    Regards, Nishi

      • Thanks Hemant.
        I checked with various institutes which offer CFP course but I am confused to see that the course duration varies from 2 months to 2 years.
        Please suggest which one to opt.
        Also if CFP (Certified Financial Planner) & CPFA differ ?

        Regards,
        Nishi

  13. Dear Hemant,
    So far I have not taken any term insurance and only thing I done is construction of two houses only. Now i am 39 , with wife and 2 small children. Could you please tell what term insurance and for what amount i have to taken. My monthly income comes to around 60,000/- Any medical insurance I need to take now for my oldger age.

    Kindly avice.

    Girish

  14. HELLO SIR, actually my brother is facing a problem that he is in business of real estate dealing on commission bases. earning is average you can say needs are fulfilled. my father is unemployed. 2nd brother is earning 15,000 in a month. we have a house costing 1.25 cror which is in our native place. nw we are residing in ghz. in rented house. There are no saving yet. we have no bank balance. and our father is not in favour of selling the house. ther is no fix income in real estate business. we want 50,000 fixed monthly income. So what we can for this purpose.

  15. Hi Hemant,
    This is nice article.
    I want to be a Financial Advisor but i dont have that background.I am Production Engineer & belongs to same domain.Only thing is i love this subject & want to gain some knowledge in this.I really dont want to build Carreer in this sector but atleast guide my friends & relatives for Financial planning. I can look this as Second Income.Some questions:

    1). From where should i get the FP degree ?
    2). How to be Financial Advisor for LIC (Not LIC Agent,Dont want targets)
    3). What exam should i pass for LIC FP ?
    4). As compared to other forms of Investment and Insurance, i have less knowledge in Shares/Bonds.Is it neccesary to be master in this ?

    Can you please guideme in this regards.

  16. I have same query as Mahesh,
    I am investing:
    1. LIC jeevan saral – 2000
    2. LIC Market plus – 1500
    both are 30 years plan. I want to invest in some SIPs and by my R&D i have narrowed down the search to HDFC top 200 and DSP BR funds and also thinking of taking home loan for which EMI will be 13-15k per month…will these be beneficial for me, please advice….

    • Hi Saurav,
      As you mentioned Mahesh’s Name – I will suggest you to read what I have just replied him regarding insurance.
      Your MF selection looks good – in loan my suggestion will be that you should limit your EMIs to 40% of your monthly income.

  17. Dear Hemeant Sir,
    I am investing as follows.
    1. Genral Provident fund – Rs.6000/- per month
    2. ICICI Prudencial Lifestage Pention Policy- Rs.15000/- per year
    3. LIC Money Back Policy – Rs.268/- per month
    4. LIC Life Insurance Policy -Rs.800/- per year
    5. LIC Saral Jeevan – Rs.255/- per month
    6. Postal Life Insurance – Rs.2400/- per year
    7. Pearl’s RD – 1770/- per year
    8. Reliance Gold Saving Fund SIP – 500/- per month
    9. HDFC Equity Fund – Rs. 1000/- per month
    10. ICICI Prudencial Focused Bluechip Equity Fund SIP – Rs.1000/-
    11. Personnal Saving (Private) – Rs.250/- per month
    I am a Salaried person having Govt. job. I have Salary about Rs.23000/- per month. My Salary increasing upto Rs.26000/- from Aug.2011. I am taking Home Loan from ICICI Bank and the EMI for that is Rs.5500/-. Are the above investmentz good & beneficial for my future? Suggest me some Mutual funds SIP for investment giving high returns.

    • Hi Mahesh,
      Sorry for such a delayed answer – I don’t know how I missed this one.
      One thing that I would like to highlight in your portfolio is that you have many investment linked insurance policies – these polices are expensive & also will not be able to provide you good insurance.
      My suggestion is draw down a task sheet – every week select 1 insurance policy & do complete research. End of the week take a final decision that you would like to continue it or not. This will also help you in developing your own process & also enhance your decision making skills which is very important for every person.
      You can also read this article
      https://www.retirewise.in/2010/02/exit-strategies-for-mis-sold-insurance-policies.html

  18. Hi Hemant,
    I will say Nice Site,
    I am surprised yesterday i was discussing a Plan” LIC Samridhi Plus (highest NAV guaranteed) ” with LIC FA. and I was goggling to compare it with MF and found a nice article LIC Samridhi Plus Review. I joined and feel this is very good site for novice people like me. Although I m 79 born, but I never think before about Finance Management(May be because of I am science student or found only specific Advisor).
    After reading few of your article I come to know that I should had invest in Term Plan and Mediclaim policy earlier.
    could you suggest me something?
    Currently I am investing Rs 3000/- in MF of 3 year Tax saving plan and have planned to buy a Home.

    Thanks

  19. Hello Hemant,

    Thanks for the informative article. My wife is the only child of her parents and she is a housewife. Her father did not do his retirement planning well and now her parents are financially dependant on me. Moreover, her father has been diagnosed with diabetic nephropathy since November. Presently I am covering for all his medical expenses. Is it possible for me to claim tax benefits for these expenses under section 80DD ? If so then what documents do I need to provide in order to claim the benefit ? Are there any articles elaborating the clauses under this section ?

    Thanks

  20. Hemant

    I have two property loans of Rs 76 lacs and Rs 18 lacs with EMI of Rs 70000 and Rs 25000 respectively , the 70K emi shall start from Jan 2012 , I intend to pay off Rs 18 lacs loan before the 70 k emi starts , the plan is to invest Rs 10 lacs in equity (direct equity) and Rs 35 k per month through various Diversified equity mutual funds SIP’s , This is planned in order to reach the amount of Rs 18 lacs in a years time so as to pay off my one loan and if something is left pre pay a part of bigger loan too.
    I will be thankful if you can guide if the thinking is on the right track

    • I don’t know what will be the final outcome of your decision – but going by rules it’s a poor strategy. One should not mix short term goals(2 years) with long term investments(Equity). You should read this article:
      https://www.retirewise.in/2010/06/long-term-and-short-term-investments.html

      As such there is no strategy to generate higher returns in short term & repay your loan. I don’t have any information regarding your others savings & investments – so it won’t be possible for me to give any suggestion..

  21. Hello Hemamt
    nice articles, very recently I joined your website and I must say that you re doing a wonderful job by educating the investors. as you said, one must take utmost care in selecting a financial planner, what about those, who have just moved to a new city and hardly knows anyone, whom to trust or not..
    couple of days back, I met one agent of LIC as we intended to buy a term insurance for me,30 yrs, male, so we were checking the different plans with different companies.though the premiums were very high of LIC term ins plan, when i asked her that we re getting the same plan with less premiums in ICICI, she tried hard to convince me that ICICI does not clear the claims easily etc etc..moreover a lot of terms and conditions are also there with ICICI.i checked ICICI brochure but could not find one.
    can you please tell me how the claim processing is different in case of LIC and other private companies?

    • @ Vishal & @ Vijeta

      You both have same question – when someone move to new city.

      When we move to new city we try to find out good shopping market, best restaurant, and good doctor – similarly try to find one good financial advisor. Secondly advisory service is not an emergency service – if you have a written financial plan you don’t need anyone to consult on day to day basis. New advisor/agent will focus on ‘what’s new’ in the market rather than ‘what’s good for your goals’. I am constant touch with more than 20 practicing CFPs and they all have 40-50% clients which don’t belong to their city. So try to find out an advisor which suits your requirement & try to build a long term relationship.

      @vishal
      There are 3 criteria of selecting a term plan – death claim settlement ratio(even ICICI have a decent claim settlement ratio),
      http://www.slideshare.net/tflindia/insurance-companies-death-claim-ratio-3406070
      brand & financial position and the least important is premium that you pay. Basic process of claims is same for every insurer but still that leaves a big room for everyone to add their criteria. 80% of the claims that are rejected are due to false information shared by insured or his agent.

  23. I had a query and seek your advise for the same.
    I worked with an organisation for 4 years and left the same about 6 months back.Now I want to withdraw my PF but I am told that the withdrawl will attract tax since I have not completed 5 years of PF membership.
    Can you advise what tax it is ? And is there any arrangement by which the same can be claimed for refund ? Please advise ….

    • Yes tax will be there – best option remains that you transfer that amount to new employer. Never withdraw that amount till your retirement; this can become big chunk of your retirement corpus.
      If the employee withdraws accumulated provident fund amount (EPF) before rendering five years’ of continuous service, the sum representing the employer’s contribution and interest on employer and employee contribution is taxable in the hands of the employee. So this amount will be added to your current years income & you have to pay tax according to your income tax slab. There is no way to claim it as a refund.

      • Hi,

        I would like to know whether only interest earned on EPF is taxable or the total accumulated amount withdrawn is taxable? If it’s on total amount, is there any option to invest it some where, other than those under 80C, so that tax on it can be saved.

    • @Every Reader

      We believe that Mutual Funds are best way to invest but even here many distributors take investors for ride. In Mutual Fund side, Monthly Income Plans are sold aggressively by distributors and within one year the overall AUM in MIPs have increased more than 8 times; not because the product has suddenly become so good for investors but the reason is the sheer greed of agents who now get more commission in MIPs than in Equity Funds. Systematic Transfer Plan from MIP is another way to take investors for a ride. Also year end is approaching, so soon you will find your agent asking you to invest a big amount in one go as he may be receiving a foreign trip on your business.

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