Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

These days NRIs have seriously started looking for trusted Financial advisors in India to have a secure future. Earlier most of the NRIs considered their banker a Financial Planner but the way banks mis-sold products – NRIs have lost huge money & also trust.

But will their hunt for the best financial planners in India take them to the right advisor or they will be hunted again by a quack.

Financial Planner in India

Read – Complexities in the case of Financial Planning for NRIs

How NRIs Can Choose The Financial Planner in India

Sometime back when medicine was at its initial stage in India there were many quacks that used their half-baked knowledge to treat people & people were exposing themselves to huge risks. Even now you can find such quacks in smaller cities or towns. These quacks mushroomed as there were loose regulations and checks.

In another Industry, a financial advisor in India is facing a similar situation… anyone can make a claim about himself/herself being a financial planner. Now there’s SEBI regulation that regulates financial planners but as an NRI you know how Indians make a mockery of rules. So even without registering with SEBI – a lot of agents claim themselves to be financial planners.

Agents sell financial products like Washing powder or Soap. Wrong washing powder or soap may not cause too much damage… but you cannot say the same thing about financial products; wrong financial products have the power to ruin your family’s future.

There are lots of Madoffs & Puris in India who can easily destroy your financial life.

How NRIs Can Choose The Best Financial Planner in India

Check – 5 Financial Must-haves for NRIs

Why do NRIs Need a Financial Planner?

Most of us have many questions regarding our financial life –

  • Am I saving enough for the future?
  • Have I done the right investments?
  • Will my money be enough for my family?

If you are an NRI, there are additional things to worry about –

  • Which products can i invest in India?
  • What are the tax implications of my investments?
  • Am I paying the right amount of tax?
  • How to manage money in India and place of residence effectively?
  • How do I bring back my savings to India in the most efficient manner?

You, of course, can plan your finances on your own. But you can opt for your wealth to be managed by an advisor in India if –

  • You do not have time
  • You don’t think you can invest so much effort in financial planning
  • You are not sure of your knowledge
  • You cannot keep up with changes in rules and regulations as you are living abroad or
  • You feel you need an expert to manage your finances

Must Read – Common Financial Mistakes Of NRIs

In this case, all you need to do is choose the right financial planner. It is not an easy task as there are many financial planners in the market.

I have created a short Video – Importance of Financial Planning for NRIs. Must check…

Basic Requirement for Choose Financial Advisor in India

There are many financial Advisor in the market. To shortlist you should make sure that your Financial Planner should fulfill 2 basic requirements – he should be a Certified Financial Planner AND SEBI Registered Investment Adviser.

Here are some factors NRIs can consider to choose a Financial advisor –

Experience in NRI services

A financial planner might be competent, but it is important to verify if he has expertise and experience in handling financial planning for NRIs. More importantly, check if he has managed the finances of people living in your country of residence. The regulations governing NRI investments and taxation are different in different countries and you might land in a soup if you make mistakes with respect to them. For example, NRIs from the US and Canada have restrictions on investments in mutual funds whereas NRIs from Singapore or UAE do not have these restrictions. NRIs are not allowed to invest in some public sector bonds. The financial planner should be aware of these pieces of information.

Must Check – 5 Financial Planning Moves for NRIs in 40s

Product Knowledge

There are many avenues of investment – Equity, Mutual Funds, Corporate Deposits, etc. There are different types of bank accounts for NRIs. The financial planner must plan the investment portfolio such that it is diversified, correct and makes the NRI earn optimum returns. You can ask for references from other clients or information on annual returns made for clients. Ask questions about different products and investment processes for NRIs, to access if the financial planner has the requisite knowledge and experience.

Expert (or at least aware) in NRI Taxation

Taxation is a whole different ball game. The financial planner in India must know how to handle taxation across countries. He should be aware of –

  • Double Taxation Avoidance Agreement (DTAA),
  • Income that is taxable in India and tax-free in India
  • Regulations and Tax implications for bringing money in India and taking money abroad.
  • Taxation on the purchase and sale of investments, real estate, etc.

If the financial planner does not have relevant expertise, he should make services available of a tax expert for you and both of them should be in sync about your financial matters.

Investment Philosophy and Investment Process

Getting the maximum returns is not the most important aspect of a financial plan. There are many other things to consider –

  • It should be easy to contact the financial planner. There should be a communication plan in place.
  • The financial planner should have a systematic process for making a financial plan and executing it. There should be provisions for regular review of the financial plan.
  • The financial planner should be knowledgeable about micro and macroeconomic factors that affect NRIs and also have some knowledge of currency movements. Nope… by mistake, I added this point 😉
  • The financial planner must know the efficient process of investment. He should be able to add value in the process in some way.

Some questions to ask your financial planner

  • Does the planner have experience in handling clients in your residence country?
  • What is the communication plan? Will there be regular meetings (online/offline)? How often will reports be given?
  • What are the various services provided and then, you can check if the services will fulfill your requirements?
  • What are the fees and how is it calculated?

The right financial planner can bring improvements to your financial plan. Returns will be optimized and there will be a significant increase in your wealth.

financial advisor in india

Read –Benefits of Early Financial Planning for NRIs

Red Flags For Your Existing Financial Planner

These can be some of the troubles that a fake financial planner can bring to you:

  1. If he doesn’t suggest you build a 3-6 months emergency fund – you will always dip in your long-term investments & that can be disastrous in a situation like a bear market.
  2. If he doesn’t advise you to repay your expensive debt before starting investment – you will always be in danger if the tide goes out.
  3. If he misjudges your insurance requirement or suggests an expensive endowment or ULIP policy as a solution rather than a term plan – you will probably not be able to achieve your financial goals.
  4. If he suggests you trade-in equity or take a leveraged position in the markets – the high probability is that your capital will be wiped out.
  5. If he is showing you the moon about how he can generate the highest returns by churning your Mutual Fund portfolio – actually he is just fooling & your fund will not even be able to achieve market returns.

There can be n number of examples that can be quoted here but before we publish this there will be a new list ready.

“If you choose the right Financial Planner, you will have peace of mind and an optimum financial plan. The wrong one can lead to sleepless nights and even financial losses.” wiseNRI

NRIs should check these points before & after hiring a financial planner in India:

  • Trust but always verify.
  • Always take advice in writing.
  • Ask what he will be earning from implementing a plan.
  • Do not sign any blank document or cheque & always ask for a copy of the final documents submitted.
  • While taking insurance always fill the form rightly – don’+  t allow the agent to just play checkers in the form.
  • Never give unlimited access to your money to an advisor that includes full power of attorney.
  • Be suspicious of pressure selling techniques like the best investment & that will not be available after a few days.
  • Always ask for the negative side of every product – if there is nothing negative better don’t invest as you are going to get shocked at some later stage.
  • Always check that any product fits or helps you to achieve any of your goals – just don’t invest anything for the sake of investment.
  • Consider the timing of the proposed transaction. Maybe the product manufacturer is motivating the advisor – be it month-end, year-end, or some trip that he will get if he achieves his targets.
  • If you don’t understand something ask again & again – put your hard-earned money only when you have clearly understood that thing.
  • Always take a second opinion – every 3-5 years get your advisor’s recommendation audited by someone.

It’s always Buyers Beware & Buyers Be-aware.

Would you like to share your experience with your existing financial planner in India? If you have any questions feel free to add them in the comment section. 

Published on February 8, 2022

Hemant Beniwal

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

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