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Financial Planning career opportunities

Last Updated 15 April 2015, 16:16 IST
The career of Financial Planning is in a nascent stage in India and will evolve with times to come. So what is this career and why are people taking to it? Let me begin by sharing the need for a financial planner with an illustration.

Obesity in India has tripled over the last decades. The prime reason being changes in lifestyle such as increased junk food intake and reduced physical activities with the advent of gadgets. I met a smart teenager, extremely sharp and very good in studies. The girl, along with her parents pressed the panic button when she hit the triple digit mark on the weighing scale.

The parents took a very intelligent decision of not experimenting with the child or trying out quack medicines that promise miracles with catchy lines. They instead decided to opt for a personal trainer who embarked upon the journey of slow and gradual progress of reaching the goal of achieving the optimal weight.

The personal trainer decides the workout plan – mixes efficiently between cardio and weights, plans a strict diet and also builds in  a cheat day. The cheat day comes after every twentieth day of following a strict diet regime. This is done to break the body from getting into the habit of only eating diet food.

The personal trainer is as good as the student itself. The girl religiously followed the instruction and in two months lost eight kilos. Nothing succeeds better than success – this further motivated the girl to embark upon the fitness mission.So how does the tale of this little girl relate to the current financial situation and role of financial planners in India?

Need for a financial plan

Lifestyle inflation in today’s context is the kind of obesity that is affecting new age Indian earning population in more than one ways – some people are earning very well yet they are not able to save enough; the second audience needs to save more to continuously fund the rising aspiration levels and rising lifestyle inflation.
Changed Scenario

In the earlier years, interest rates hovered between 12 and 14 per cent annually, with inflation pegged at about four per cent. Now the interest rate is around eight per cent with last 10 years average inflation at around eight per cent. The old investment habit is like trying to beat the treadmill by running on it.

Era of specialisation

With passing time, investors are realising and demanding solution-based approaches and not just a product selling approach. A financial planner is capable of drawing a well thought out gameplan based on people’s needs and requirement, ensuring financial fitness. Over the period of time, product selling approach will give way to holistic financial planning and a solution based investment.

Demand-supply mismatch

India has only a little over 1400 Certified Financial Planners with the proportion of working age population likely to rise from 58 per cent to 64 per cent by 2021. India has a very low density of financial planners when compared with some developed economies like the US, that boast of over 60,000 financial planners for a population of 320 million. However there are over 20 lakh insurance agents, over 50,000 mutual fund agents in addition to bank branches that distribute financial products. These financial product sellers will have to upgrade their skill set to survive.

The role of financial advisors goes beyond mere Excel calculations and letting clients know how much they need to save for funding their children’s education, buying homes or building their retirement nest. The role of the advisors will only become meaningful if the clients act on the suggested plans, make progress with money and find sense in the entire process.

Investors coming out to share happy experiences will kickstart the vicious cycle of many people seeking expert financial assistance, thereby demanding more financial planners. India has the highest savings to GDP ratio; yet we have very few investors. Bulk of the people investments is parked into traditional investment products such as Fixed Deposits, Insurance products, Real Estate and Gold. Let us see how these would have performed over the last 35 years. An investment of Rs one lakh in Fixed Deposits 35 years ago would have multiplied to Rs 18 lakh and gold to Rs 34 lakh.

I guess a lot of investors are aware that the age-old products may or may not serve their purpose; yet many are afraid of investing because they fear that they would lose their hard-earned money.

The advisor must play the role of a driving school instructor ensuring that the client learns investing in new products without any accidents in the initial learning years of the investments. Educating the clients about the pros and cons will help us in inculcating better investment habits.

A good financial planner is an amalgamation of intuitive and analytical mindset helping investors to attain optimum financial well being. So if you think you have all these traits in you, you can look towards becoming a financial planner.
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(Published 15 April 2015, 16:16 IST)

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