Certified Financial Planner(CFP) focuses on advisory services to individuals. It is retail financial advisory services. Financial services ,on the retail side especially, have had major transformations. Several factors have been catalysts for this change. Privatisation of the insurance and mutual fund sectors has increased product options for investors. Secondly the falling interest rates and the end of guaranteed -return products have prompted investors to look for alternative modes of investment. Yet another cause has been the number of scams taking place in the financial markets leading to mistrust on casual advisors. Investors hence are looking for trusted financial advisors. Financial Planning has existed in foreign countries for many years and this sector is opening up in India as the markets are rapidly transforming.
Financial planning is the process of meeting a client's life goals through proper management of their finances. Financial planning helps a person make advanced provision for financial needs of the future. The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve an individuals financial goals e.g. buying a home, saving for your child's education and marriage or planning for retirement.
Consumers face many challenges in managing their personal finances. The variety and complexity of financial products is increasing and the volatile stock markets have left many consumers feeling confused. The need for professional advice in such an atmosphere is needed.
Nature of Work
The financial planning process, as defined by the Certified Financial Planner Board of Standards includes the following six key steps :
-- Establishing and defining the client-planner relationship
-- Gathering client data, including goals
-- Analysing and evaluating the client's financial status
-- Developing and presenting financial planning recommendations and/or alternatives
-- Implementing the financial planning recommendations
-- Monitoring the financial planning recommendations
The planner is trained to take a 'big picture' view of the client's financial situation to give recommendation for financial planning. Financial planners may also be registered investment advisors, insurance or securities agents to extend support for buying and selling of financial services/products.
A financial planner can offer general wealth-creation advice and assistance across all financial markets or specialize in areas such as : Retirement Planning, Superannuation, Estate Planning, Small Business, Financial Management and planning, Trusts, Tax, Stock broking and investments, Debt and risk management.
Personal Characteristics
The best financial planners have two vital skills - people skills and analytical skills. If you have good counselling skills and are driven by a genuine desire to help other people, then financial planning offers the right choice. Financial planners require the ability to synthesize information. People with a background in Accountancy/Counselling/Law/Insurance/Investments/ Finance/Taxation do well.
Employment Avenues
Financial planners can choose a corporate career or establish their own financial planning practice either by themselves or together with other planners. In India, with growing mutual fund and insurance sectors, impending pension reforms etc. there is vast scope for financial planners. Employment is opening up in : Asset management companies, Banks, Financial planning organizations, Life insurance companies, Accounting or law firms, Stocks and securities brokers, Fund managers, Credit counselling organizations, Large companies to look after employee benefits.
In the US and many developed countries this is a well established career.
Earnings
This industry offers great financial security. Financial planners are among the highest paid professionals abroad. They earn by : Fees charged to the client based on hourly rate/a flat rate per plan/a percentage of the value of the client's assets and/or income or a combination of these methods/commissions from investment or insurance companies for product sold as the plan is implemented/a combination of fees and commissions/salary for those employed by financial organizations or other institutions.
