A financial planner will be able to help you meet your financial goals, both short-term and long-term ones. Since in India, there is no such standardization in financial planning cost, most people remain confused regarding the average cost and its related features. Not every financial planner charge an equal amount.
Before hiring the services of one, you must make sure that you understand their service fee structure and every single element covered in the fee charged. This is where you can understand the trustworthy nature of a financial planner. The right people will explain to you what value they add in exchange of their charged fees and how will they be of assistance to you.
Let's discuss this topic elaborately below.
4 ways these planners charge fees from you
There are different ways of charging fees from a customer. For financial planners, they have four such available options with them, to charge fees for professional services provided to their clients. Let's explore them here.
Advisory charges
What most planners do is, they charge a certain compensation for the preparation of a financial plan. However, the amount differs from one advisor to another. The payment will vary according to the value presented by the financial expert. But do remember to check them out before their selection.
They develop a suitable plan and give them to you, along with a few other recommendations like to opt for mutual funds investment plans instead.
Commission-based charges
There are many planners who follow this fee structure. After developing relevant plans, they do not charge anything further for asset management. But they require their customers to invest in schemes like mutual funds investment plans via them. They thereby, earn a certain percentage of commission for this.
Asset-based charges
A lot of financial planners engage in client wealth management. They usually charge a certain small percentage of their assets every year for this service rendered. However, you must remain careful of those planners who demand a higher percentage for managing a greater amount of wealth. The time taken to manage two contrasting wealth figures is the same. So, there should be no hike in service charges.
Performance-based charges
This scenario arises when a customer desires a higher return on their investments and thus hire a financial planner for the same. So, in such a situation the planner receives a basic fee for their service and in addition, they are entitled to a distinct charge, if his customer manages to receive higher returns on their investments through his guidance.
