Important Questions to be Asked Before Hiring an Adviser

by Mutualfund Advisor Mutual Fund Advisor

Mutual funds are the most sought after investments, however, cornering the right portfolio is something which most of us find it difficult as right selection of mutual funds will help in reaping long term benefits in the form of assured returns.

It is therefore advisable to hire a professional and an experienced Mutual Fund Advisor, who will help the investor to make the right decisions based on the portfolio and needs and requirements of the investor.

With the umpteen numbers of financial advisors in the market, choosing someone who has the best interest at heart is difficult but it is essential requirement to ensure fruitful investments. Risk is another aspect of the investment coin and the financial advisers need to brief the clients about it.

Below are certain important questions that have to be kept in the mind before one hires good and professional Mutual Fund Distributor:

1. Is the Advisor Disclosing how he is being Paid?

A mutual fund distributor is paid in commission, a certain percentage of the investment. The commission is paid to the distributor by the fund house and it differs from one fund house to another. Before hiring the agent whether it is distributor or adviser ascertain how he or she is being paid. In case the adviser makes the impression that he/she offers a free service or is not comfortable in disclosing the details of mode of payment, it is caution signal for the investor, who should move ahead with other options available in front.

2. Does the Advisor have Good Focus on the Investor or the Product?

A good financial advisor needs to spend time understanding the financial circumstances and goals. Does the person put the product at the center or the client? This is the key factor for selection. Also, the investor has to take notice if the advisor is talking long term or short term as normally a clever operator will talk about returns in one to two months or less.

3. Is he Promising Unusually High Returns?

If the advisor is promising exaggerated returns then you as an investor should be cautious. The advisor, who promises high returns; tries to allure people to invest which is certainly unethical.

4. Does the Advisor is Talking Enough About Risk?

Risk is the other side of investment and making clients aware of the risks is important to the job of the good and professional mutual fund agent. However some advisors skip this part and rush to normal questions and if you see your advisor doing so, then you must stop and ask him or her to explain the different types of risk involved.