In India, the Financial Planning Standards Board, FPSB, is doing path breaking work in educating, standardizing and raising the quality of the profession. The SEBI Chairman has mentioned that bringing intermediaries under supervision was a near term goal of the regulator.

However, as in most consumer industries, caveat emptor, or the "let the buyer beware" principle works in financial planning and advice as well. Good and qualified financial planners give you advice regarding investments, insurance, taxes, wills and trusts, and mortgages — advice tailored to your needs to help you achieve your financial goals.

If you choose your planner well, he or she will become an important part of your life, and you should be together for a lifetime. After all, financial planning is a lifetime activity!

Also Read: Why You Need a Financial Planner

Based on our experience with the most common frauds that investors encounter, we are suggesting Six Never Dos Between You and Your Financial Planner:

1. Never write a cheque made payable to your planner, always make cheques account payee only.

Your cheques should be made payable only to mutual funds, brokerage firms, or insurance companies. No legitimate planner would ever allow a client to write a check for investments or insurance payable to him personally or to his firm. This is one of the most common forms of fraud that investors face. All mutual funds offer local clearing facilities or pick up any draft making charges /banking charges. So never issue cheques payable to the planner. Also, cross all cheques as account payee, write your name and the purpose of the investment on the reverse of the cheque, mention your cheque number and bank details in the application form.

2. Never allow your planner to list himself as a joint owner or beneficiary on your accounts.

The only place your advisor's name should appear on documents is as the broker /distributor /agent of record, with their code. Be careful that it's not appearing as a joint holder or a nominee. Also ensure that after you hand over a form, no additions are made to it. The easiest way to ensure this is to cross out all empty places in the form, before handing it over to the planner.

Also Read: Keep a Personal Account after Marriage

3. Never lend money to your planner.

A Code of Ethics governs the Financial Planner. Like a Medical Practitioner, he/she must maintain confidentiality and not use your financial information in any form other than what is beneficial to you. If your financial planner asks for short-term loans, its time to sack him/her. This is symptomatic of potentially bigger financial irregularities and also unethical on their part.

Also Read: 7 Deadly Sins of Financial Planning