What credentials should one consider when looking for a financial adviser?

I am planning to take help of an adviser for my financial planning. Can you explain to me what are the things that I should look for in an adviser? Do credentials such as certified financial planner and Sebi-registered investment adviser matter?

It is indeed a very very good idea to consult a specialist. Educational qualification may help however practical experience of advisor is far more important in the Indian scenario. Ask questions about the approach, methodology, process, monitoring capability, years in the profession, proof of concept, consistency of recommendations, team strength, planning tools and technology, feedback & resolution mechanism, and so on. There are multiple of regulatory requirements however a basic broking/distribution/agency license is completely adequate because the most important thing is how the adviser is going to advise you. Meeting three or four advisers and understanding their approach will further help you.

Does target-based investing works. I am 24 and investing in mutual funds for two years. I have realised that the way to make money from equity investment is to redeem it regularly once it meets the target an investor has in mind. If I have a target of 15 per cent, I will redeem it every time my investment reaches the return threshold.

It is a trader's strategy not that of an investor's.  The trader makes all these kind of rules, and there is no data anyways to prove that this has worked consistently. Unfortunately, most people and institutions are far more inclined talking the trading-oriented language rather than speaking about long-term investing and wealth creation.

Several insurers have come up with low-cost unit-linked insurance plans (Ulips). Besides being low-cost, they also have tax benefit on investment, accumulation and even on withdrawal. Do you think Ulips are now as competitive as mutual funds?

Such new low-cost Ulips do stand in the category of good investment ideas. There is an enormous tax advantage, and that could be used in the investors' favour. In terms of cost structure, they are competitive as mutual funds and some even better. The only question that remains is the investment performance and that it is the most important question. In this case, there are a few Ulips whose performance is comparable to that leading mutual funds. Also just like the laggards of mutual funds, there are also ample Ulips that have not delivered good returns.

If my fund is not performing well and I want to switch it, can I withdraw everything at one go and invest a lump sum in another fund or should I withdraw money in parts?

The best part about mutual fund best friends is high flexibility. You can do anything that you please. You can buy in lump sum or parts; you can sell a lump sum or in parts. You can sell a fund and invest into another of the same category/sector or a completely different one. Historical performance is good enough evidence for the ordinary investor to make a decision regarding investments.

Is it better to invest in multi-cap funds or separately in large, mid and small cap funds?

If you are a first-time investor, then it's a good idea. Remember the time frame rules remain the same — four to seven years for a single investment and 10-15 years for an SIP investment. That should be a commitment when you are beginning your journey to make money from stock markets and through mutual funds. As your confidence increases, consider spreading your investments across the different fund types. 
The writer is MD & CEO, Aditya Birla Sun Life Insurance. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in