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Planning your finances right

Growing wealth and a wider gamut of investment products have created a need for expert financial planning, writes Rahat Bano.
Hindustan Times | By Rahat Bano, New Delhi
UPDATED ON JUN 02, 2010 10:57 AM IST

Arti Sahgal could have got a good job with her economics honours degree, but she chose to study further and become a certified financial planner, or CFP. The “whole subject of financial planning interested” her as did the idea of being qualified to help people achieve their life goals — be it building a home, or saving for children’s education or ensuring a decent post-retirement life.

It’s not just high net worth individuals she provides her advice to. Like a doctor, CFP can also give advice to family and friends. And “you can add to your wealth, too”, says Sahgal, who is a senior manager for financial planning and investment advisory at Bajaj Capital Ltd, Delhi.

The growing abundance of wealth in India is widening the scope for professionals like Saigal.

Lovaii Navlakhi, managing director and chief financial planner, International Money Matters Pvt Ltd, Bangalore, has made it his “mission” to educate clients about financial planning as part of his business ethic. That maybe because when he made a financial plan for himself at the age of 38, Navlakhi says he realised that he was doing it ten years too late.

Unlike Sahgal, Navlakhi’s tryst with financial planning started much later in his professional life. Once he got onto it, he decided to get “his” approach certified by the Financial Planning Standards Board, India (FPSBI). Navlakhi recounts, “After 18 years of work experience, I ventured out on my own in 2001.

I found it odd that no one seemed to be focussed on the customer while offering financial products. So, I tried to understand why my client wanted to invest.

Without realising it, I was following the financial planning approach. Hence, when I attended the introductory session on the CFP course, I felt that this qualification would give legitimacy to my approach. I was quite thrilled to be at the first convocation of CFPs in India.”

More CFPs are needed in financial services companies, banks, distribution houses, insurance companies, equity broking and financial planning firms in a growing, liberalised economy, say industry professionals. Navlakhi elaborates on the changed economic environment: “Till about ten years ago, earning levels in India were lower. The market and the economy were inward-looking and insulated from developments across the globe. The government guaranteed returns on long-term products, apart from providing tax incentives. There wasn’t much reason for individuals to be concerned about investment alternatives. All this has changed. This results in a big requirement for financial planning.”

Other than the organisations mentioned above, “there will be scope for CFPs to work for para-planners (those who make financial plans for CFPs who deal with customers directly). The other area of boom will be in the financial literacy space: providing and delivering content, etc.”

Independent practice presents a huge promise. “However, this profession requires staying power: it is a long-term game,” says Navlakhi. “Relationships take long to develop, cement and grow. One of the questions that clients like to ask is how many downturns have you seen? Grey hair is an advantage! So, one should use the first five to seven years as the laying of a very strong foundation, and learning the ropes in a financial planning practice. The end result: financial growth, for sure; but more important, immense satisfaction at seeing your clients achieve their financial goals one by one.”

To make a mark in this field, you need a strong grip on your subject. “Knowledge is the key,” says Sahgal. “That’s why CFPs have to keep upgrading themselves in terms of awareness about what is happening at the macro as much at the micro level, i.e. clientwise changes.” Also, if you fail to complete the continuing education programmes organised by the FPSBI, you stand to lose your CFP tag.

“With advice gaining prominence in Indian markets and regulators tightening the grip, the scope for CFPs is immense. It is how you capitalise on the opportunity and make the best of it,” says Sahgal.

What's it about?
A financial planner is supposed to help clients achieve their life goals by planning for their investments, taxes, insurance, retirement, and estate and most importantly, expenses

Clock Work
7 am: Read business newspapers, glance at Asian markets
9.30 am: Reach office. Confirm appointments
10 am: Meet the research team and get an update, including how markets have opened
10.30 am: Respond to e-mails
11 am: Examine documents readied for meetings and understand implications
Noon: Head out for meetings, may be two or three. Make copious notes
4 pm: Head back to office and translate the notes to meeting minutes. Review documents for next day’s meetings prepared by support team
5 pm: Have a quick meeting with colleagues to share experiences
7 pm: Call/ meet client who is available only after hours
8 pm: Head home, have dinner and unwind
10 pm: Check US markets

The Payoff
A fresh graduate with a CFP mark can earn Rs 2.5 lakh to Rs 4 lakh per annum. “The earning potential of a CFP is very good from a medium- to long-term point of view,” says Navlakhi

Hunger for knowledge, a practical approach, and not just theoretical knowledge
. Be passionate about the concept of financial planning
. Strong understanding of personal finance
. Good people skills
. Analytical aptitude
. Enthusiasm

How do i get there?
CFP Lovaii Navlakhi suggests students should start early. “This needs to start at the classes VI and VII level. Basics of how a bank works; distinguishing between wants and needs etc — all practical aspects are a must.”

Enrol for the FPSBI’s CFP programme after high school. Graduates in any discipline can pursue CFP certification.

There are two pathways:
1) Regular Pathway - through either education providers or “self study”
2) Challenge Status Pathway - in this you need to appear for only the final module exam
Exams are conducted online by National Stock Exchange. The CFP qualification is equal to a Master’s. The total cost:
Registration fee: Rs 10,000
Exam fee: Rs 13,000
Certification fee to be paid every year after clearing the exams: Rs 5,000

Institutes & urls
. Indian Institute of Financial Planning, New Delhi and other cities
. IMS Proschool, Mumbai
. Mandar Learning Academy, New Delhi and other cities
. RNIS, New Delhi and other cities
. Full list of education on

Pros & cons
. May have to face flak from clients when things are not good
. It’s a sunrise profession
. The CFP is an internationally-acceptable qualification

'India needs more financial planners'

Ranjeet Mudholkar, principal advisor, Financial Planning Standards Board, India, elaborates on the potential in this sunrise profession

What are the career prospects for certified financial planners (CFP) in India? Apart from financial services companies, banks, distribution houses, insurance companies, equity broking and financial planning firms, is there any new industry/kind of organisations which are hiring CFPs? What's the size of India's CFP population? What's the demand and supply situation like?
The CFP certification programme has an edge over other finance-related programmes today because of the sheer gap between the demand and supply of the qualified professionals in this field. India has roughly five crore-plus families with a surplus for investment and assuming that one certified financial planner can handle 100 clients, we require at least five lakh CFP certificants. This presents a fantastic opportunity for all those who are striving to make a mark in the financial services field.

As a certified financial planner, one may choose to establish one's licensed financial planning practice. Alternatively, one may work with
* Banks
* Life insurance companies
* Accounting or law firms
* Stock brokers
* Fund managers
* Wealth management companies
* Training solution providers
* KPO (specialising in financial planning)

Certification not only gives a qualification and an expert understanding of the financial planning subject but it also gives one 'international' recognition. With fewer than 1100 CFP certificants in the country, India certainly needs many more of them as Indians are earning more and more money and they need qualified money managers to take care of their finances. Once a CFPCM practitioner, you will be among the top tier of financial planners in the country.

What's the scope in independent practice?
Various international researches conducted by FPSB Ltd and its associates show that CFPs' clients are more satisfied than the clients of other financial advisers and are interested in a broader range of financial advice. CFPs often become involved in many aspects of their clients' lives and help multiple generations of the same family. Most of these practitioners use a comprehensive approach to problem solving and communication that better prepares them to meet and anticipate client needs. Because CFPs make recommendations based on their clients' needs, the typical client relationship for a practitioner lasts many years.

The scope in independent practice has gone up considerably after the recent regulatory changes being introduced in the financial services sector. The planned move towards fee-based advisory will considerably help the qualified financial planners in the long run.

What's the mobility quotient of this qualification?
Currently CFP certification is offered and recognised in 23 countries including Australia, Austria, Brazil, Canada, China, Chinese Taipei, France, Germany, Hong Kong, Indonesia, Ireland, Japan, Malaysia, New Zealand, The Netherlands, Republic of Korea, Singapore, South Africa, Switzerland, Thailand, the United Kingdom and the United States of America.

For the benefit of the public, FPSB Ltd regulates how professionals use its CFP marks outside the borders of the country or region in which they first received the certification.

Who should pursue the CFP qualification?
Any candidate who is interested in making a career in financial advisory, private banking, financial planning or wealth management must prefer the CFP Certification.

Apart from technical understanding of financial products, good people skills, listening skills, a grasp on current affairs, vision and ability to think are some of the virtues a good financial planner must have.

How suitable is the CFP education programme for India?
If Indian economy has to reach anywhere near its potential, it will need many more certified financial planners who can channelise the Indian savings into productive investments. Financial literacy is very low in the country, which is leading to a huge opportunity loss. We need qualified money managers who can make optimum utilisation of available resources and enhance per capita GDP.

What's the RoI in this credential?
Financial planners earn income in a variety of ways:
* Fee charged on an hourly rate, a flat rate per plan, a percentage of value of the client's assets and/or income, or a combination of these methods.
* Commissions for the products sold as the financial plan is implemented.
* A combination of fees and commissions
* Salary for those employed by financial organisations or other institutions

CFPs' salaries at the entry level range between Rs 2 lakh and Rs 4 lakh, at the middle level between Rs 6 lakh and Rs 10 lakh and at senior levels, above Rs 10 lakh.

Interviewed by Rahat Bano

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