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.

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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:

Establishing a comprehensive strategy to achieve the financial objectives.

Invest your wealth in the most productive way possible and expand it.

Assists in preventing the filing of heavy taxes.

Manage risks by building reserves that are pre-planned.

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:

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.

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.

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.

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.