Financial Advisor Fees, Cost & Charges in India
In today’s world, financial planning has become one of the most vital factors in achieving financial goals. Be it long-term or short-term, financial planning allows the effective achievement of financial goals by taking savings and investing them in various financial instruments. However, the Indian financial market includes numerous investment instruments, some of which have a high potential to let the investors earn profits but are complex. However, it is always on the safer side to invest based on extensive market research and financial knowledge.
Since investors do not have the time or resources to gain such extensive financial knowledge to analyse securities, the only way to invest successfully is by consulting a financial advisor. As financial advisors charge a fee for their financial advisory services (which effectively lowers the profits earned), it is important to have a detailed understanding of financial advisor fees in India.
This blog will work as a guide on typical financial advisor fees. But before you learn about financial advisors and their charges, it is wise to know what they do.
Who is a Financial Advisor?
A financial advisor is a specialist who provides investors with financial advice and helps them achieve their goals in life. They conduct financial preparation, which is the method of achieving life goals through proper financial management. Life goals can include owning a home, investing for the education of kids, retirement planning or estate planning. A big part of the role of a financial advisor is to make customers feel relaxed and create a sense of confidence in them. Financial advisors have to keep up with the latest business events and provide their customers with impartial advice.
The Cost Perspective of Financial Advisors
Like every service rendered, financial advisors also charge a fee for their services. However, similar to brokerage firms with different costing models, financial advisor fees also differ based on how qualified and experienced a financial advisor is. Furthermore, the charges also include the assets that they manage. The higher the asset value, the higher the financial advisor charges in India. Financial planning is not a commodity, and standardisation is therefore not feasible. The financial advisor charge is dependent on the criteria and the package of the financial planner, i.e., selective or comprehensive) service and procedure involved in financial planning. However, you can always compare and analyse the different charges for financial advisors to ensure the best cost package in the financial industry.
How Much Does an Indian Financial Advisor Cost?: Financial Advisor Fee in India
Financial advisors analyse the financial conditions of their clients, and their goals and recommend investments that can help in achieving the set goals. For the same, they charge a fee called financial advisor fees which is based on numerous factors.
Let’s learn about what the job is to find out the best estimation of a financial advisor’s fee and how you can benefit from them. Financial advisors, in short, are responsible for:
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Establishing a comprehensive strategy to achieve the financial objectives.
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Invest your wealth in the most productive way possible and expand it.
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Assists in preventing the filing of heavy taxes.
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Manage risks by building reserves that are pre-planned.
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To beat inflation, control savings.
The annual charges vary from as little as Rs 6,000 to Rs 40,000. In terms of investment planning, risk management, asset management, and tax planning, financial advisors help tremendously. Furthermore, considering inflation, uncertain employment, health issues and potential financial ambitions such as higher education, early retirement, travel, etc., people are increasingly seeking advice from a financial advisor nowadays.
Different Forms of Financial Advisor’s Fees
The typical charges for financial advisors are not equal and vary depending on the type of financial advisors, clients and services rendered. A skilled financial advisor is experienced and can explain how value can be added to your investments to let you achieve your financial goals. It is best to stay away from them if a financial advisor gives an ambiguous or roundabout reaction. Concerning the charges for financial advisors, it is wise that you negotiate the charges upfront. When the financial advisor charges are set initially, it brings transparency to the working agreement between you and the financial advisor.
Here are the different forms of the charges for financial advisors to ensure you choose an ideal costing model:
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Based on Commission
Financial advisors, based on the commission, claim themselves to be “free financial planners” that look very attractive from the outside. But there is always a catch. Commissions from financial or insurance products you purchase through them are paid to financial advisors. They get a commission for the product sold when you invest money in a policy through a planner.
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Based on Assets
Usually, as financial advisors handle the money of clients, they charge 1% of the assets per annum. Suppose your financial advisor excuses the management of a 2-crore portfolio compared to a 20 Lakh portfolio by telling you that it is ten times more difficult than a 20 Lakh portfolio. In that case, he is trying to cash in on your ignorance, and you should try to be clear with the charges model in such cases.
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Based on Results
This is a way for clients to obtain better returns on investment from financial advisors. In this situation, a simple flat percentage fee for their services. Furthermore, an additional percentage fee is also charged to financial planners depending on the higher returns after a certain amount, which is originally determined by both the financial planner and the client.
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Fixed Fee or Flat Fee
Financial advisors charge a flat fee for their service, from preparing a financial plan to annual reviews to personal consultations. To complete a specific project, some financial advisors fee, and some even charge on an hourly basis. This form of charge has been welcomed for its efficacy by top accredited financial advisors and people all over the world. The fixed fee paid by the financial planner is not dependent on the volume of the investment and is therefore not the result of the acquisition of such investments as a commission. And you can be confident of the financial planners’ professional guidance, who charge flat fees.
Become a Financial Advisor with IIFL
As the role of financial advisor comes with numerous profitable and professional growth opportunities, one can become a financial advisor, sub-broker or IIFL partner to create a fruitful advisory and financial management business. When you become a financial advisor with IIFL through the sub-broker business model, you get access to a host of industry-best benefits. The benefits for a financial advisor range from professional to investment opportunities along with unique features for better financial management.
Lifetime Earning with High Revenue Sharing:
IIFL offers up to 70% brokerage share to the financial advisor’s charges which are the highest in the industry.
Multi-Product Offering: A financial advisor
gets to choose from a host of financial products such as equity, insurance, mutual funds etc.
State of the Art Learning Platform:
When you become a financial advisor, IIFL provides expert personal assistance that helps in managing your business.
Access to client
reports at a click: The financial advisors get access to clients’ reports to manage the finances of their clients better.
Work From Anywhere:
Keep a balance between home and work as you do not need any office and work from home when you become an IIFL partner or financial advisor.
Conclusion
If you are looking to plan your finances systematically, the way to multiply wealth is through investing in various financial instruments of the Indian financial market. However, as the structure of such instruments may seem complex, it is wise to consult a financial advisor. Based on different views, financial advisors can have different methods, and so the process may vary from one to another. It’s up to you to settle on a particular process and work with a financial advisor, so make sure he does everything in your best interest. Always note that those who have your best interests at heart are the best financial advisors. For the same thing, you should reach out to reputable franchises like IIFL in order to stay bullish on your future by becoming a financial advisor.
FAQs on Financial Advisor Fees & Charges
Ans: The financial advisors may charge a fee of approximately Rs 15,000 in the first year. The financial advisor cost may also fluctuate based on the invested capital of the clients or other services rendered.
Ans: Yes, as they are financial experts and have extensive knowledge, they are well equipped to guide you in attaining your financial goals. Since they make numerous efforts to ensure your investments are successful, the charges levied are worth it.
Ans: You can become a financial advisor with IIFL through the sub-broker model. Visit IIFL’s website to learn more and apply for the same.
When determining the cost of financial advice, consider some of the below things before making a final decision. They are: –
- Fee Structure: Find out if the advisor takes a portion of the assets under management (AUM), an hourly rate, or a fixed fee.
- Services Offered: Assess the advisor’s scope of services and ascertain whether the costs correspond with the degree of assistance you need.
- Performance: Evaluate the advisor’s past achievements and determine whether the fees they have been charged are justified.
- Openness: Make sure that all costs and possible conflicts of interest are transparent.
- Compare Rates: Examine the advisor’s charges in relation to industry norms and those of other advisors providing the same services.
While there are costs associated with hiring an advisor, the potential benefits, including improved financial outcomes and peace of mind, often outweigh these expenses. Overall, the decision to hire a professional financial advisor entirely depends on individual financial needs, goals, and comfort level with managing investments independently.
Yes, financial advisory fees are often negotiable. Clients can negotiate fees based on factors such as the complexity of their financial situation, the scope of services provided, and the advisor’s fee structure. It’s essential to have open communication with the advisor and discuss expectations regarding fees upfront.
Some advisors may offer fee discounts for long-term relationships or bundled services. However, it’s crucial to ensure that negotiated fees still align with the value and quality of the advisory services received.
