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How to Evaluate a Financial Planner’s Performance?

Consumers hire advisors far too frequently without thinking about the calibre of their choice. Even when you pick your adviser wisely, complacency (or even inertia) may nonetheless creep in. As a result, many clients neglect to assess the effectiveness of their advisors. In this article, you will learn how to evaluate your financial planner’s performance.


When you decide to engage a financial planner’s services, you are making a decision to plan, which moves your wealth from the present to the future. Nevertheless, depending on the services and investments you select, you will need to pay for the services both now and in the future. It is wise to choose a financial planner who can benefit you in all your needs.

Latest Update: The government has made certain amendments to the Finance Act 2020. It allowed individuals to adopt flexible tax optimization strategies to enhance their Financial planner’s performance. In the new regime, the tax slabs are lower but the majority of the deductions are not available.

Who Is a Financial Planner?

A financial planner is a certified investment or financial advisor who offers their clients qualified guidance on wealth management, insurance, retirement planning, taxes, and investments. They are also known as a personal or certified financial planner. Financial planners usually work for a company or on their own. They offer guidance on how to manage their finances.

Financial planners work closely with clients to clarify goals, examine goals, determine risk tolerance, and ultimately produce a plan for getting from point A to point B. However, a financial planner’s responsibilities do not end with the creation of a financial plan. It must be watched upon, examined, and when necessary, reorganised.

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Top Five Methods to Evaluate a Financial Planner’s Performance

The most effective measures for evaluating a financial advisory practise, along with some advice for analysing the data are given below.

1. Check Average Revenue Per Client

The average revenue per client (ARPC) is a fantastic indicator to find out how profit margins are changing over time. In other instances, a low ARPC figure suggests that the financial advisor is focusing on a clientele base that is too narrow.

If so, the advisor may boost ARPC by presenting more goods and services. The company could also focus on clientele with a higher net worth in order to increase profit margins by lowering marketing and retention expenses. The average revenue per client is also known as  average revenue per user

2. Why Are Assets Under Management Important?

The financial industry has long favoured the asset under management (AUM) indicator because it is closely related to the total income of the company. In order to determine whether a company is expanding, business owners look at the trend in AUM over time. Prospective customers also examine it. A strong AUM suggests knowledgeable and reliable counsel.

Goals for the upcoming month or year can also be determined using this metric. Additionally, when it comes time to develop an annual budget, the revenue projections obtained from AUM will be useful.

3. Cost of Your Financial Planner

While seeking the lowest prices for your financial planner is not advisable, it is equally unwise to be paying prices that are much more than those that are offered elsewhere. Your advisor can help you with benchmark costs, and you can also get a sense of what others charge by conducting a fast internet search or making a few calls to different companies.

It isn’t optimal to search for the lowest cost or stay away from the greatest cost. Always keep in mind that there is a trade-off between price and services/quality. It’s crucial to look at all costs when investigating fees, not only the adviser’s but also the fees associated with the investments the advisor has suggested for you.

4. Accountability Is Important

Your financial adviser must take responsibility for the investment vehicles, funds, or instruments they recommend or direct you to use. For instance, it may sound wonderful and fit with your risk tolerance if your financial planner offers a retail fund, such as a property investment opportunity with 15% returns annually over five years. However, as your financial advisor put any of their own money into the funds?

5. Check for Past Performance

Past results do not guarantee future results, as you may have heard, and this is unquestionably true. However, if you’re searching for a competent financial planner, it goes without saying that you want to work with someone who has a track record of generating returns. 

If your financial planner has been in business for a while, request a performance assessment over the last 5, 10, or even 20 years, and look at the results they have produced for their clients.


When assessing the success of your financial advisor, there are a number of elements to take into account. It is crucial to evaluate your advisor once a year to make sure you remain satisfied with their communication, your relationship, and the way they are assisting you with future planning. We hope you’ll think about meeting with one of our fiduciary planners at Edelman financial engines as part of your search for a reputable financial advisor.

Frequently Asked Questions

How do you judge a financial advisor's performance?

To evaluate a financial advisor's performance, consider factors like investment returns, portfolio diversification, risk management, communication, and fees. Assess their ability to align with your goals, provide transparent advice, and adapt strategies to changing circumstances. Regular reviews and open dialogue ensure their ongoing effectiveness in managing your financial well-being.

What benchmark should you use to evaluate your financial adviser?

To evaluate your financial adviser, consider benchmarks like: Portfolio performance compared to relevant market indices Fee transparency and competitiveness Adherence to your investment objectives and risk tolerance Responsiveness to your inquiries, Alignment with fiduciary standards. Additionally, seek referrals and assess their professional qualifications and experience.

How often should you evaluate your financial plan?

Consider revisiting and revising your financial plan annually. This allows you to confirm whether the financial goals you initially set are still applicable and adjust them accordingly. Keep in mind that your plan may evolve between these yearly reviews.

Why should you evaluate your financial plan?

It helps in the following aspects Retirement Planning Risk Management Tax Management Emergency Preparedness Proactive Financial Planning Goal Setting Efficient Budgeting Accomplishing Financial Objectives Peace of Mind Heightened Financial Awareness Financial Stability Debt Management Assistance Enhanced Quality of Life Maximising Financial Resources

Where can I find financial performance?

You can analyse the financial performance using Financial statements like the balance sheet, income statement, and statement of cash flows. Financial performance indicators are measurable metrics employed to gauge a company's performance.

How do you control financial performance?

To control financial performance, track income, expenses, and cash flow regularly and start investing in the future. Set specific financial goals and create budgets to guide spending.

How do you analyse financial statements?

Analyse financial statements to identify trends and areas for improvement. Adjust strategies as needed to meet targets and optimise profitability. Regularly review and adapt financial plans to changing circumstances.

When should you consult a financial planner?

Seeking the assistance of a financial advisor is most beneficial when you require financial guidance, particularly during significant life transitions or when your financial circumstances grow more complex like : Commencing your initial job Saving for your child's education (private K-12 and/or college) Transitioning between jobs or careers Purchasing a home Coping with job loss

Are financial planners a good idea?

ot everyone finds a financial advisor necessary, especially considering the extra expense. However, having the extra guidance and support can be crucial for achieving financial objectives, particularly when feeling stagnant or uncertain about the path forward.

What is asset management in financial planning?

Asset management typically involves overseeing a client's investments, encompassing the selection of stocks, bonds, mutual funds, and other investment vehicles. It's the process of strategically guiding where a client should allocate their financial resources. Notably, professionals providing asset management services often extend their expertise to encompass comprehensive financial planning.

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