Last Updated on December 29, 2021 at 6:13 pm
We had recently surveyed clients of SEBI registered fee-only investment advisors and obtained 685 responses. These are the results and a discussion of key learnings. We thank everyone who has participated in this survey. Your contribution will make a big difference in improving fee-only advisor (FOA) services and client-advisor relations.
Two types of questions were asked in this anonymous survey. Yes or No questions or objective type questions, all of which are discussed below. A few long-answer questions cannot be shared here as they are too diverse, but I will share specific feedback with the fee-only advisors.
Summary for new readers: A SEBI registered fee-only financial planner is a person who can provide a comprehensive, holistic financial plan that considers all your present and future financial and insurance requirements. They work only for you and do not get commissions or incentives from anyone else. I have been maintaining a list of such planners from mid-2014 onwards, and hundreds of freefincal readers are working with these advisors. From Sep 2017 onwards, an association of such fee-only planners called fee-only India was launched.
Survey Results
1. Is your advisor part of the freefincal list of fee-only advisors?
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- Yes: 94.5%
- No: 5.5%
2. Is your advisor part of Fee-only India?
- Yes: 94.7%
- No: 5.3%
3 How did you come to know your advisor?
Participants were asked to explain if they chose “other means”. The majority of the responses were “internet” or “internet search” and therefore not useful. Some said they read a news article mentioning the advisors or mentioned other sites/portals.
4 Why did you choose to work with an FOA?
Notice the 36.5% of clients who wanted a second opinion. These are DIY investors who already have a strategy, already have an opinion about good/bad. Satisfying this group is, therefore, the hardest. Fee-only advisors may consider offering such a “second opinion” as a separate service as the requirement for this group is quite different and a lot more demanding than those in the orange or green segments above.
5. What factors influenced your decision to select the advisor the most?
Clients do not care about fees or location of the planner of the languages they can speak as much as they care about experience and qualifications. This is most heartening! Naturally, a good online presence and good reviews by others matter too.
I think it would fair to assume that experience here refers to not just the number of clients handled but also years of experience in related areas and their commentary on developments in their personal finance space.
Clients who insist on the FOA being in the same city are unnecessarily limiting their choices! Fee-only advisors are not desperate for clients. They can pick and choose who they wish to work with today.
6. Did the advisor’s website clearly mention the nature of the financial planning process, or did you have to seek clarifications?
This is most important smooth client-advisor relations. The client must understand the exact nature of the service. The FOA should make this as clear as possible with an extensive FAQ. A client should not enter into an engagement with FOA before clearing all doubts and questions.
For example, the client should ask,
- Will you give product recommendation only, or will you buy and sell on my behalf?
- Will you suggest active mutual funds or passive mutual funds?
- Will you provide stock recommendations?
- Will you try to time the market? Will your buy or sell recommendation depend on market levels?
These questions are not made up. They are typical remarks made in the survey. The FOA should also provide an FAQ on their services page. Every new question they receive from a client should be added to the FAQ page.
Just as “the wand chooses the wizard”, it is the FOA who chooses the client and not otherwise! One of the most important lessons an FOA learns as they start practising is who to work with and who to avoid. For this to happen, the nature of the service should be crystal clear to avoid wasting the time of both parties.
7. How was your experience?
Many of the “not satisfied” stem from an improper understanding of the nature of the service provided. Some would like the FOAs to play agony aunt. To sit and listen to all that they have to say. I am afraid this is not practical. If you want an “experienced” FOA, then they would have many clients and limited time to spend with each. The situation is the same as wanting the services of an experienced CA or lawyer, or doctor.
The feedback that the FOA has to explain all of their choices and suggestions (whether or not the clients asks for it) is indeed justified and will be discussed with the FOAs.
8. Will you go back to the advisor for a review?
- Yes: 89.5%
- No: 10.5%
9 Are you able to reach your planner whenever you need his support?
- Yes: 96.6%
- No: 3.4%
This largely addresses the issue mentioned above. If a doctor prescribes a medicine, it is their duty to explain why and explain any side effects. If we refuse to leave and ask them, “what are the other brands available in the market?” they will get irritated. It is the FOAs duty to answer all relevant questions. Not answer all questions.
Is an FOA available when there is a real issue? The answer is an overwhelming “yes”. That is all that matters.
10 Will you recommend the advisor to your friends?
- Yes: 91.2%
- No: 8.8%
In summary, most clients working with fee-only advisors are quite happy with the services received. The fee-only movement is in a strong position today, commanding the trust and goodwill of clients. Like with any good service, some negative feedback is unavoidable, but this will be discussed in detail with FOAs to ensure the nature of the service and terms of engagement are as clear as possible. I wish to once again thank the participants for taking the time to provide this feedback.
Are you thinking about working with a Fee-only Advisor? This is the list of freefincal SEBI Registered fee-only advisors. Here are some articles that will help with forming the right set of expectations.
- What Should I consider when hiring a fee-only financial planner?
- What is the real purpose of a Financial Plan?
- Here is why you can safely consult a fee-only advisor living in another city
- Seven ways a fee-only financial planner will NOT help you!
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About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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