Financial planner qualification knowise

A decade back, an investor seeking information on investment products had very limited options to choose from. Most investors would go with products advised by their agents, family, friends or colleagues. There has been a drastic change in the way investments are handled today considering the vast information that is available at the click of a button. The current buzz word is “FinTech”. This revolution has brought financial services products onto technology platforms which has led everyone to have access to huge amounts of information before taking a decision.

An individual looking to buy a mobile phone or any other retail product visits multiple e-commerce sites, compares the prices of different brands, offers and features before short-listing the product he/she wants to buy. Same is the case with investors in the financial services industry. Today, before making the investment decision, the investor reads through the product features and compares them with the peer group. So a financial advisor may not be able to close the “sale” by telling the investor that “this is the best product/this is the product with highest returns”.

But selecting a mutual fund or an insurance plan isn’t as simple as buying the cheapest product loaded with best features. There is no “One size fits all” concept applicable for financial service products. Every best performing product might not suit every investor. Every investor has unique requirements like:

  • When is the right time to start planning for retirement
  • How do I save tax
  • I am unable to understand the need of covering risk
  • When is the best time to invest
  • Which is the best investment option
  • Where should I invest the retirement funds
  • How do I plan to transfer my inheritance etc.

It would be difficult for an individual selling one or two financial products to deal with all the financial needs of a client. In such cases, an investor would need help from someone who can prepare a comprehensive financial plan long with an execution strategy. A financial advisor or a planner would be the right person in guiding the clients in setting financial goals (retirement, buying a house, foreign travel, higher education, covering risk – insurance etc) and helping them achieve the same. Globally, people approach financial planners for handling their personal finances. It’s like having a family finance doctor.

A financial advisor/planner comes with comprehensive knowledge in various financial products, operational aspects and their suitability based on the objective of the client. For an individual to call himself/herself as a financial advisor, he/she needs to possess the required knowledge on subject matters like:

  • Retirement products and planning
  • Risk assessment and insurance
  • Evaluating investment options
  • Taxation applicable to individuals
  • Estate planning

Apart from the knowledge on the subject matter, a financial advisor should also hold necessary professional qualification. The professional certification could either be a course like Certified Financial Planner (CFPCM) or NiSM Investment Advisor(Level 1 & Level 2). These certifications would help an agent or product distributor to transform into a financial planner/advisor.

The Indian financial industry needs qualified financial planners/advisors. We have little more than 500 entities/individuals who are registered with SEBI as Investment advisors. With regard to CFPCM as a certification, we have close to 1800 CFP certificate holders in India vis.a.vis 75000 CFPs in the United States. There is ocean of opportunities for an aspiring individual to make a career in Financial Planning domain. Hence, one should aim to become a doctor not a pharmacist.

Article written by Karthick CS (Director, Knowise Learning Academy)

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