Are you looking for Financial Planner? If you are, you should go through this article which talks about almost all the necessary information you need before hiring a financial planner. Most of the clients are confused about simple things like, where to find a good financial planner? , What they should expect from financial planner? and most importantly they do not understand the financial planning environment in India and how it operates. There are lots of myths and misunderstanding about financial planning field and this article will give you most of the basic information a new client should be aware of while hiring a Financial Planner.
What is a Financial Planner and what is the Certification for Financial Planning
A financial planner is a professional who helps clients deal with various personal financial issues through proper planning. Just like we have a doctor for our physical problems, we have Financial planners for our Financial problems. Just because you know “what is a Mutual fund” or some “Tax laws” or can buy and sell stocks on Stock market, it does not mean that you don’t need a Financial planner. Financial Planners are professionals who have done the certification, have learned strategies and have gone through in-depth knowledge to understand how to restructure a common man’s financial mess and come up with a sound long term plan which will help a client achieve his/her financial goals in future.
Just like CA , MBA , CS and other professional certifications, there exist a certification course for Financial Planning which is called CFP (Certified Financial Planner) . Read more about CFP Here .CFP is regarded as the top most certification in Financial Planning and It’s recognised worldwide in most of the countries .
The 6 steps of Financial Planning which every Financial Planner has to go through are
- Step 1: Setting goals with the client
- Step 2: Gathering relevant information on the client
- Step 3: Analyzing the information
- Step 4: Constructing a financial plan
- Step 5: Implementing the strategies in the plan
- Step 6: Monitoring implementation and reviewing the plan
Who is not a Financial Planner ?
A lot of CA’s , CS’s , MBA (finance) , CFA , ICWA and other Finance related professionals feel that they are right professionals to do Financial planning . Just because “Financial Planning” or “Personal Finance” has “finance” word associated with it, it does not mean that any one from different finance field can be a Financial Planner. Financial Planning is very different from what CA , CFA or a MBA Finance does .
Financial planning deals with individual personal finance, his future financial goals, risk appetite. Having CFA or MBA (finance) as qualification will definitely help at some level and may be some CA’s , CFA’s or MBA (Finance) have a great understanding of Financial Planning, but it’s not true in general for everyone. In the same way, any ULIP Agent , Insurance advisor or Mutual funds agent, Wealth Manager, PMS guy is not a Financial Planner. These people are there to assit a Financial Planner to sell the products. In the analogy of Medicine field, Financial Planner is a Doctor and all these agents , Wealth managers etc are like Compounders.
Where to find a Financial Planner (Important)
There are two ways of hiring a Financial Planner for your self .
1. Hiring a CFP
Incase you want to hire a CFP, which is recommended, you can get a list of CFP’s in India at FPSB website link , Click here . You can find out CFP based on
- Name/Company
- City/State
- Nature of Employment
Tip : You should search for CFP’s who are “Independent Financial Planners” or “Self Employed” , Read further to understand the reason .
2. Hiring a non-CFP
You can also Hire a non-CFP , but you have to be very careful in that. Before CFP certification came to India , we had excellent planners in Industry who understood the financial planning process subconsciously and still practice that but without having the CFP certification . These people can be from other backgrounds, but can have sound financial planning knowledge. They are rare . Some of them who I can think of are people like P V Subramanyam.
The biggest problem one faces in hiring a Financial planner is “Trust”. So you need to have some level of trust with Financial planner and for that you need to interact with him, spend time with him, get references from family and friends and once you are satisfied you can then hire him/her . A financial planner at the end is someone who is also interested in educating you and not just making money. Just imagine a doctor who gives you medicine, but does not tell you preventive measures to take, so that you are not ill next time. Would you like to visit him again and again ? He should be interested in educating you upto a level where you can take informed decisions. Only then you can call him a good doctor , the same applies to a financial planner .
Current Status of Financial Planning Practice in India
There are two ways a Financial Planner makes money
- By pure consulting and advising (by making the financial plan)
- Through Commissions (from products sold to clients)
- Combination of 1 and 2
In India people dont value consulting and hence Financial planners are having a hard time getting clients whom they can charge on pure consulting basis, therefore what has happened is most of them make money through commissions from selling the products. Based on this fact most of the agents, wealth managers etc have completed CFP certification just because they can get the tag of “Financial planner” and then make a financial plan and finally sell products to them and make good commissions, hence at present the current status is that 8 out of 10 CFP’s in India are associated with some mutual funds or Insurance company as either of
- Analyst
- Asset manager
- Branch manager
- Accountant
- Vice president
- Advisor
- Senior manager
- Wealth manager
They are still doing the same old work with a new certification in hand called “CFP” , because they know that in coming days CFP’s is what everyone will prefer to hire for their Financial planning and similar services. These so called just for name sake CFP’s make the financial plan and when you buy the products, they will make majority of their money through commissions .
So what you have to look for while hiring a financial planner is that He/she should be independent Financial planner and should not be associated with some Mutual funds or Insurance company and has no compulsion of executing the plan through him. There should be freedom in Clients hand that he/she can execute the plan from anywhere he/she wants. As an additional service Financial planner can give an option to have financial plan executed through them, but its should never be compulsory, because otherwise there will always be some level of biasness while recommending products to you.
The biggest problem with Financial Planning is that still “Financial Planning” is confused with “Investment Planning” . The moment I tell someone I am a Financial Planning writer, they start asking me stupid questions like
- What do you think Market will do tomorrow?
- Which is the best mutual fund?
- I have 5 lacs spare cash , how should I invest it so that I get maximum returns?
No one talks anything other than investment. Financial Planning is more than just investment planning , its more than that , infact much much more than that . Read more to understand what is the goal of Financial planning .
Why to Hire an Independent Financial Planner
Do you know how a Financial Plan is made ? No you dont !!. Here are the problems with the Financial Plans
1 No Personal Touch
What most of the Financial planning company or professionals do is that they have automated Financial Planning softwares in which they just stuff your data and create a Financial Plan automatically with a single click. This can take just minutes. While there is nothing wrong in creating the basic template of Financial Plan with software, what really matters is how much of that is customised to a clients needs personally, so a financial planner should give enough time to tweak the financial plan to suit a clients need, which is more though for Financial planners working for big organisations especially mutual funds and Insurance companies , because they have to stick too much to the template they use and not to much of customization is done or recommended.
An Independent Financial Planner has more liberty and flexibility to make a financial plan which will be more suitable for you. So if he wants to add some extra part to financial plan or want to restructure something totally , its possible with independent financial planner , but its rigid with non-independent financial planners .
2. Lack of quality
Everyone like beautiful pictures , we are attracted to beautiful people no matter who crappy they are from inside , some of the best looking things in the world are totally shit . Same is true for Financial Plans , Most of the financial plans I have seen has beautiful pictures , amazing colors , beautifully designed tables and great back ground , but when it comes to content and the quality of Financial plan , they suck !! . There is nothing great about them . But clients like them because we are visual animals and we assume a clean and beautiful thing literally . I do not say that all clean and beautiful financial plans are crap , but most of them are . A simple analogy is a dish you get at 5 star hotels and some authentic, but not so well known eating place , the food you get at 5 star hotel will look great and there will be too much time spent on making it beautiful , but at the end it can taste very average or some time bad, but the food you get at home or some less known place may taste better and may be more healthier but then it might just look ok and not “beautiful” .
A financial planner who is independent and takes limited clients does not have time and energy to work on beautification of financial plan, he mainly works on making financial plan better and not the looks of financial plan. so if you watch a financial plan from an Independent financial planner, it might not look as beautiful as from other planners.
What to Look into a Financial Planner
You should watch out for following things in Preference
- Competence or Knowledge
- Confidence
- Your level of Trust and comfort with Financial Planner
- Frankness
What to not look into a Financial Planner
- Promise of Returns
- Magic (financial planner is not some magician who will fix all your problems and will make a financial plan which will try to achieve all you want)
- Instant Performance
How much to Pay to a Financial Planner
This is a debatable topic , still let’s try to understand and find out how much do Financial Planners deserve .
Financial Planners in US and Australia gets as much as $150 to $200 per hour . (thats close to 7.5k – 10k per hour). Financial Planners in India cannot and should not ask for that kind of money for two reasons .
- They will not get it
- FP is new in india and there is still not standard procedure or standards to create a financial plan . So what they can expect is not more than $30-$40 max per hour .
Now in india people will literally laugh if a Financial planner asks money in per hour basis , it’s just not what indians can imagine. Imagine doctors asking per hour fees here or lawyers or anyone . we Indians like to pay one time fees or lump sum fees , thats the model india runs on. A good financial plans takes around at least 10-12 working hours (strongly focused and distributed across several days) . From that stand point a price in range of 10k – 25k looks reasonable for a Financial plan. Anyone who is charging less than Rs 10,000 is undervaluing it and working more for less money. Other point is , you have to understand that all financial planners differ from each other and the amount of detail and care they take while creating it .
Comments , Please share your views on what are the other issues you guys face / will face while choosing a financial planner . Incase you know of a good Financial Planner , feel free to share here .
Check my latest trip Pictures at Netrani Islands . I did Scubadiving , snorkeling and Tent Camping .
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{ 113 comments… read them below or add one }
Great Post.
I was waiting for your comments on idea of Financial Planning Week-India but never get your views. I thought you don’t ignore your readers.
Now I would like you to share your views on your blog.
Hemant Beniwal, CFP Professional
Jaipur
Hemant
My apologies for not putting my comments on linkedin thread .I will do it soon . I have mailed you .
What are the other problems you see our country is facing in financial planning field other than what I have discussed . Would you like to add something useful here
Manish
Your readers will ask this question.
Do I need a Financial Planner?
Ask Yourself……
Do I have enough for retirement?
Am I paying more taxes?
Am I working on a budget?
How can I repay my loans?
How can I protect my assets?
How will I pay for my child’s education?
Should I invest now or wait for stable market?
How do I minimize my investment risk?
Are my investments beating inflation?
Why should I start investing?
Is the stock market too risky?
How to investment in a fluctuating market?
When can I retire?
How can I achieve my financial goals?
Is my portfolio diverse enough?
Am I saving enough?
Do You Have Time To Plan?
Typically caught up in our day-to- day work, you can afford very little time for financial planning. Moreover, with little access to real time information and lack of ability to interpret and use financial information, investment decisions just do not figure in our list of priorities.
Creating wealth is not a rocket science. All it requires is discipline and direction by Financial Planner.
Hemant
Nice points . Even though you have covered most of the things individuals have to think , one main question is still now answered and that is even though people ask these questions, how to motivate them to hire a financial planner , I am sure all these questions as in eveyrbody mind at a sub concious level , but then nobody feels that they need experts for that , Somewhere we feel that we can take care of all this ourself .
Dont you think even Financial Planners are mainly trying to get more and more clients somehow rather than creating awareness about Financial planning , so that people get the feeling of hiring a financial planner themselves . Atleast readers on this blog have started appreciating the need of financial planning and its importance .
Manish
“The greatest enemy of knowledge is not ignorance;
It is the illusion of knowledge.” Stephen Hawking
Most of the people think they have great knowledge, so you can’t put more water in already full jar.
The only way is either they should understand & accept new things or we tell them that their jar is full of grubby water. You are already doing your part through Jago Investor.
You can lead a horse to water, but you can’t make him drink. We are not pushy salesman – we can just tell what is right & what is wrong, it’s their financial life.
Secondly I agree with what you said about role of Financial Planner. But days are not far when their will be qualitative rating of Financial Planners.
Hemant
“But days are not far when their will be qualitative rating of Financial Planners.”
Wow !! .. this looks very interesting , We are discussing lots of ideas of future
. So what I feel can form as the deciding factors can be
- Service given to clients (time taken , level of details planned , clients confortableness)
- Cost
- How well financial plan moves as expected (this will take time to show , but still)
- Education provided by the FP to clients .
What are the other factors you can think of ?
Pattu , you can add some good points here .
Manish
Extract from FPSB’s (Outside the United States CFP Marks are owned by Financial Planning Standard Board Ltd.) report:
Who is a Financial Planner?
FPSB has defined a financial planner as “a professional who uses the financial planning process to provide a client with integrated strategies to achieve financial and life goals and who has demonstrated the abilities, skills and knowledge outlined in FPSB’s Financial Planner Competency Profile.”
According to research conducted by FPSB among its 23 countries, 78 percent of territories do not regulate the term financial planning, and most territories regulate financial planners by the products they advise on, rather than as financial planners per se.
Because the term “financial planner” is loosely regulated and often poorly understood by the public, companies in the financial services industry may choose to define the term according to a person’s job, rather than the person’s competency.
Ted Rechtshaffen “My four-year old son could print up a business card and portray himself as a financial planner [without violating any law].
Hemant
Ya , Even in India Most of the Financial planners are the one who got converted from Agents or wealth managers . There are very few true “Financial Planners” .
Manish
Finally our dream came true:
“FPSB India proposes to launch Financial Planning Week on its 5th year of establishment.”
Expected Dates 2nd Week August 2010
Hi Manish,
First of all I didn’t received mail on this topic in my mail box and took this topic from ur gmail status.I don’t know how this happen or u r yet to post on mail.
Secondly I really didn’t understand the concept why payment shd be hourly basis.
Can u share ur thought ?Is anyone in india getting hourly paid ?There is no such concept in india.Its culture in US and other countries n those people don’t have job in hand all the time.
What will going to happen with middle/lower class people ?Is the financial planning
not applicable for them ??
Regards,
Yogesh
Yogesh
The reason you didnt get mail about this post is because i have set the time as morning 5:00 am . Rest of the post I publish late night so you directly see it in your mail box .
The next point of Hourly fees of Financial planner , I have said in the post that its not realistic in India, may be you misunderstood .I accept that it will not work in India , its only in US and other developed countries where per hour wage concept works
What do you feel are challanges in our country for clients as well as financial planners?
Do you feel you will hire a financial planner some day ?
Manish
lol don’t know about mail… but damn you manish… sms alert woke me up
hehe .. Nice
You must have got the mail too
Manish
Hi Manish,
I feel everyone shd get work and i understand the concept & role of specialization too.
And Financial planner will be best person to do this job undoubtfully.
Knowing the thing theorticial is different from implementation.we can read n learn but still
we will not able to implement as same as CFP.
But I still don’t know what kind of advise i will receive from CFP in given time and in given fees.
Suppose i goes to CFP n tell him that i want money after 15 years(for kids education) n after 25 yrs(for kids marriage) and money in old age(something like pension)
How he will help ?Will he be suggesting some specific products(MF,ULIP) or something else?
Can u elaborate more in this direction ?
Regards
Yogesh
Yogesh
“we can read n learn but still we will not able to implement as same as CFP” , I guess you meant “planning” and not “Implementation” . Implementation simply means execution of plan and buying different products as per the plan .
Regarding “What will financial planner do ?” , so he will help in Planning your goals , Evaluating that its feasible or not and can it be achieved considering your risk appetite, Future income flow etc . Common person do not think too much about small things which a financial planner can do . For example , if you are planning to save for you child education in US after 20 yrs, a common person will think of basic stuff like Money required after 20 yrs considering current expenses and may be he will factor in inflation also in that . But what he will not think about is .
- Changes in currency valuation after 20 yrs (today it is $48 , what if in future it will be $20 or $60)
- What will be the tax implications of maturity proceeds after 20 yrs, will it affect the savings we are doing for child education ?
So a CFP will help in planning , evaluating it , planning for an investment strategy for you and also recommend products (preferably products category and a list of funds with names for you to choose from) and then help you implement it or let you implement it and most importantly , reviewing it later so that to make sure its moving on the right track .
Still you have doubts ? Clear them , ask more .
Manish
Hi
I just saw your blog today and could not help appreciating it enough. I was really looking for thsi kind of info. Concerning the topic of need of Financial planner, let me share my own experience of the same.
At the begining of the yaer 2010 I promised myself that I will hire a CFP to advise on my financials and help me with my financial decisions. I requested one of the firm which is regular on rediff and other sites who provide FP help. The guy who came to my house was infact AFP (associate planner) is what he told me and was in the process of clearing some exams to be a CFP. Then he explained everything. The only thing which made me skeptical abt them was that after discussing and preparing my finincial plan, the company would take over my all funds and do all investing in MF and Equity themselves…..I was not at all ready for it…………So the whole thing looked really awkward to me.
I was looking for a CFP who can advise me and not do all the things himself.
please let me know if somebody know of this kind of CFP or finincial planner
Alok
Alok
I have already told how to find CFP from fpsb link , why dont you try that ? you can mail me for financial planning if you are ok with CFP-pursuing planner ?
Manish
@ Alok Verma & others
Manish started this poll: How much should be the “total compensation” of a Financial Planner? Total responses 129 (18 Feb 2009)
84(65%) said less than 10000 & out of this 44 said less than 5000.
Thank god!! Manish haven’t given options less than Rs 1000 or FREE.
Let me try to explain how & how much fee is charged internationally. (1$ = Rs 45)
Some data is taken from Survey conduct on USA financial planners in 2009 & others are based on websites of different financial planners.
A. Fee Only
1. Pure fee only
Comprehensive: $1000-$100000(ya $1 lakh) Avg $ 3600
Modular: $100 – $5000 Avg $ 859
2. Hourly Rate $ 100 to $ 500
3. Asset Under Management: .75% to 1.25% every year
B. Fee offset: Similar as Fee only but these financial Planners offsets any commissions that they receive on implementation.
C. Fee Based (Fee + Commission): They may charge you a lower fee.
Example: How they charge fees
http://www.vertexfs.com.au/go/financial-planning-services/fee-structure
Hemant
Do you see this kind of charges happening anytime soon in India
. I am sure 30-50 yrs is the time frame we can target it 
Manish
@ Manish
We can’t compare $ with rupee.
I know 4 CFP Professionals in india who are charging in between Rs 70000 to Rs 200000.(Fee Only)
Really !! .. OMG
But then they are very small in numbers and their clients would again be very big HNI’s . We are talking average here
.
Btw, do these CFP offer Internship program
. Sounds like good opportunity to make money under them .. just kidding 
Manish
@ manish
Mentorship of CFP Certificants will start from this year.
Secondly as we all are working on Financial Planning Week, I had a talk with few of the financial planners about their fees.
Most of them are working as Fee based (Fee + Commission) & they are charging first year fee in range of Rs 10000 to Rs 30000. (Second year 40% to 60% of 1st year).
Hemant
what kind of mentorship is this ? something part of CFP course ?
10-30k looks on higher side .. 10-20k is acceptable for a larger chunk ?
Manish
@ Manish
Charges for Financial Planner in India (2nd Page)
http://www.livemint.com/2009/12/27231502/Do-it-yourself-get-the-agent.html
The charges stated are way too high for many. You can’t do financial planning in one sitting and I don’ think many people (the ones that really need the planning) can afford Rs. 15,000.
There are many people who can afford that kind of many but wont spend it because they think its a waste.
Unjustified of course but the fact is I wonder if someone can make a good living doing financial planning alone.
I think the fee should be proportionate to annual/monthly income of the client.
@pattu
“Planner: The financial planner is the qualified doctor who runs his dispensary as well as his own chemist shop. So, you need to pay for all of this. Broadly speaking, CFPs today in India charge you anything between Rs5,000 and Rs20,000 for the first financial plan. Subsequently, the charges can go up to Rs15,000-30,000, or even upwards every year. This, typically, includes one or few reviews of your financial planning every year to ensure you’re on track. Note that these are ballpark figures and financial planners charge you depending on how much effort they need to put in to set your house in order.”
http://www.livemint.com/2009/12/27231502/Do-it-yourself-get-the-agent.html?pg=1
Charges depends on the time & effort by Financial Planner. And for your second question “beauty lies in the eyes of the beholder “.
Great post again,
I will see how I can make best use of these information now.
Thanks Manish again
Brij
I would like to hear more of your views on Financial Planners hiring , What are the issues you face with the thought of hiring one for your self . Do you feel a need of it ?
Manish
Manish,
Nice article. However complete trust on a financial planner is something I am not comfortable with.
Once I used to trust doctors. They they screwed my Fathers health and my wifes health. Since then I am used to questioning decisions. I am not sure a financial planner will work for me. However it could work for others. That said personal finance like health is extremely ‘personal’ and hence requires a lot of individual attention.
A basic financial assessment and a simple plan now any regular jago investor can do.
The link provides a basic plan from investment yogi (IY)
http://investmentyogi.com/themes/yogi/FinancialPlans/SampleFinancialPlan.pdf
IY now offers a free financial plan with some features unavailable.
http://investmentyogi.com/user/finprofile.aspx?option=3
People can a simple assessment of their financial health here although some features are disabled. I think IY charges Rs. 2000 for this basic plan with all features enabled. Any Jago investor reader can do this plan on their own.
You have to admit there now enough resources and calculators to do a simple plan. It comes down to how clearly one can define ones needs.
Even if you hire a planner you should what the planner is going to do hence knowledge of basic formulae and know how of a simple plan is important. Advanced financial planning could be hired.
Some details of what to expect in a simple and adv. plan are found here
http://sardesai.com/services.htm
Even this I feel if one does adequate research one can do reasonably well. Of course the plan will not be optimal to start with but one can work on it constantly to achieve goals reasonably. The point is its all down to interest and use of commonsense.
Of course a certified planner knows many things is good in so many ways but the joy of making my money grow on my own is important for me.
By the hour consulting may not work and flat rates are better in India, I think. Fees should depend on take home pay (0.5-1%) and not fixed the same for everyone.
I am not saying planners should not be hired, merely saying that I am unlikely to hire one!
Pattu
“However complete trust on a financial planner is something I am not comfortable with.”
Agreed , and one should never “trust” 100% . When we hire someone we have to make sure that we monitor his advice and ask every possible question we can to make sure we understand it , Infact its a job of financial planner to make sure we understand each part and even from his side he should make sure that we understand things completely .
regarding “Financial Planners not working for you” , thats pretty fine and I think that you personally are pretty much empowered with knowledge , as well as the attitude required for successful financial planning yourself , atleast upto great accuracy, currently I consider you are the biggest contributor among all the readers with amazing questions, which brings up important questions for all of us to think .
Regarding Investmentyogi free financial planning feature, yea it can be used to make free financial plan and a good idea for basic plan .
At the end you also understand that Financial planning is all about “Doing some calcualations” and “thinking Logically about everything” . If one has these two qualities which people lack , one can give a miss to a financial planner and pretty much do things on their own
.
I hope you agree ? Any other comment ?
Manish
Thanks Manish. You are right in saying not many people have interest to sit and do financial planning. A friend has a few lakhs in his bank acc. has no personal mediclaim and doesnt want to do anything about it! He asked me to help with his plan. Then after a few days forgot all about it. Yes there are many who need financial planners However it will take some time to catch on.
Pattu
There are similar people in India just like your Friend and I guess its mainly true for small places and under developed places like north Indian states like UP ( I come from that place) , Bihar , Orissa etc , but mainly its India story, and its not just a matter of changing their thinking . Its obviously going to help them, but its also linked to major problems like Economy development . Most of the money in our country is tapped in FD’s and Insurance policies , which should go to Equity markets , not just for returns purpose , but for other developments .
What do you think on this ? Err .. I am digressing from main topic it seems .
Manish
@pattu
“Information is not Knowledge” Albert Einstein
Thanks to google, with a single search we can enter into jungle of information. Even if you want to make a time bomb, you will know it in a click.
My Story – When I became Doctor through information on net:
Few months back my wife had some sores & blisters on stomach. Through symptoms we tried to identify disease on google as it was already 10 PM. Within few minutes we were sure that this was HERPES. Try to search about Herpes & you will know it’s very dangerous & contagious disease. That was my worst night of life, my wife slept in other room. Next morning we consulted 1 dermatologist & he said you have read it right but she has Herpes Zoster that is not that severe. Information almost killed us.
It needs a lot of experience to convert information into knowledge. Financial Planner can certainly help in this.
Secondly I have seen your interaction at this blog & it seems you possess a good level of knowledge on personal finance matters but every Indian is not like you.
Water, water everywhere nor any drop to drink.
Dear Hemant, Agreed. My point is that when you go to a planner you cannot treat him/her like a doctor where some amount of blind faith is inevitable. One must basic financial formulae to check what is being said. There several retirement calculators avaialable. Each gives its own answer for monthly contribution. So I have reason to believe that no two planners will also agree. Hence the need for information with the interest to process it so that it turns to knowledge.
Hemant
I think @Pattu has a different message, what he is trying to point out is that at this point , there is very big gap between the truthful services provided by financial planners and what we are getting at the moment as most of them are mainly interested in selling of products and making money through commissions, thanks to the environment .
What level of trust should a client have with the financial planner and if client does not have trust , what is the best way to maximize the trust part at present .
Manish
Interesting article. A person who proclaims himself as a financial planner should ideally abide by what you have mentioned, but the reality is not really true. Many such folks work for their share of commission from products they suggest to customers atleast in india. They still have a long way to go… Latest series of articles on my blog has a good analysis on how planners have been playing with customers and how to understand their motives. Good post as always
.-= Mohan´s last blog ..Decoding Financial Advisers – Part 2 =-.
Mohan
I think it will take atleast 10 yrs in India when things will “really” start to change . 9 out of 10 people in India still dont understand how mutual funds work and why term insurance is better insurance policy , what can we expect then ?
Manish
Manish,
What do you think is the best way to communicate the importance of financial planning to people? What do you think is the best medium to do so?
You took the analogy of a doctor to explain the need for a financial planner. While I agree to it principally, I feel there are some important differences too. The symptoms of illness (not being well) are easily recognized by people to make them visit a doctor. But the symptoms of poor financial planning are not so visible. So people do not realize that they may be needing the help of a financial planner. To use the same analogy, it will be like a person who’s suffering from a minor illness but keeps ignoring it till it becomes a full-blown disease.
Nice site and article.
Vinod
Vinod
Nice question . The best way I think is that we can let them know what can go wrong if they dont do financial planning, now most of our last generation has not done any financial planning and they have lived happily , so one counter argument can be “then why cant we do without Financial planning” . The answer to this is that our generation needs it more badly compared to our forefathers , because things change !! . And current generation is different , we have different life styles and the expenses these days are very different and the way it will be in next 50 yrs also is very different .
I agree your comment on analogy between doctor and financial planners , from that same comment we can conclude that issues with financial planning is more serious compared to doctor part . We need to be proactive to determine what is the issue , else at the end it will get late . Now just thing of people who have already paid 20 yrs in endowment policies , they never know that its an issue .
Manish
Well i have tried once, but most of them sells products… infact i agreed to pay on hourly basis but couldn’t find professional with holistic approach…
I have seen software generated templates, but i was not satisfied.
Will try again by going thru CFP professional list… thanks for providing link
..may be someone just tear apart whatever done so far 
i need professional outlook on financial planning i have done so far…
Marshal
Did you get it done through non-CFP ? Which company ? Most of them sell products as I said in the article because of the wrong model they follow , Imagine a chemist shop where their main intention is to sell medicines and compromise on the proper checkup .
I am sure you would find a good planner from the list .
manish
Manish,
A great blog once again and extremely informative. I really wonder how you manage to get all the information and write these blogs!! You are actually doing a great service to all of us out here. Frankly I am wondering if I can start a Manish Chauhan Fan Club!!
Well done Manish and keep up the good work.
Venky
I am glad that you think like that , the love of readers on this blog is what I am interested in and I dont need any Fan club
. When We have interest and passion for something , then time is not the limit. Even with a fulltime job , I somehow manage to run to this blog , but still feel I am not doing well and consistently try to improve on things like content , blog features , marketing the content and getting more readers . Thanks for all the support I get from you all in form of appreciation , comments and participation 
What are your views on the article and the issues we have discussed here . Do you feel Financial Planning is going to be a hit in next 2 decades and Why ?
Manish
Manish,
In my opinion, financial planing is still in infancy in India. Having said that I also believe that there is a great potential for good financial planners who can provide professional and honest service. The key is professional and honest service!!
Your article is actualy quite informative and throws open a lot of questions for the financial planning comunity to answer. I have noticed that one of your blog readers who is a qualified FP (Hemant) who is ryng to answer some questions but we need a lot more such FPs to have confidence to trust them and thier advice.
I live in Bahrain (have been in this region for the last 15 years) and I an guarrantee you that there is a huge contingent of Higher Middle and High Income earning NRIs who are investing / planning (actually not planing!!) for thier retirements like blind men in dark alleys. All these guys need serious professional assistance /planing / advice. However all we have in th Gulf region is the so called personal finance experts wo generally work for a Mutual Fund / Insurance Company / Broking Company, who actually push some product or the other in the name of financial advising / planning.
One Financial Planner in India (who I met in Bangalore, in August 2009) did not even alert me to the fact that I had one to many endowement / moneyback LIC policies (13 in all and my total annual premium was Rs. 4.15 Lakhs for a coverage of Rs. 70, Lakhs). All he was interested in was to get me to invest in Mutual Funds through his company wih a fee of 2.5% on each investment. This was in Aug 2009 after the entry loads on MFs was scrapped by SEBI. This Gentleman’s arguement was that he was charging the 2.5% fee for the professional service and research that his company would be providing. Once I returned to Bahrain after my anual leave in Bangalore, I came across Manish’s Blog (Jago Investor) which made me realy wakeup to the mistake that I had committed with regards to my insurance policies. I understood what a term policy was and in January this year, I visited Bangalore again to get myself a term policy for quite a large sum and have discontinued my 13 policies as well. Had the above Financial Planner alerted me in Aug 2009, I would have probably saved 2 quarterly premiums (approx Rs 2 Lakhs) but al he wanted was my investment in MFs.
I seriously hope that the Financial Planing community wakes up to the needs of the market and starts behaving ethically and professionally so that people who are in genuine need of financial planning can aproach the planners without the fear of being taken for a ride. Also, I believe that with the increase in awareness among us Indians rearding various aspects of personal finance, there will be a very large clientele in the coming years who will be looking to seek the services of professionally qualified (and honest and ethical!!) fancial planners. I would like to end my post / comment by saying that ‘the business is surely there for the financial planners and it is for them to loose the business!!’
Manish,
In my opinion, financial planning is still in infancy in India. Having said that I also believe that there is a great potential for good financial planners who can provide professional and honest service. The key here is professional and honest service!!
Your article is actualy quite informative and throws open a lot of questions for the financial planning community to answer. I have noticed that one of your blog readers who is a qualified FP (Hemant) is tryng to answer some questions but we need a lot more such FPs to have confidence and to trust them and trust thier advice.
I live in Bahrain (have been in this region for the last 15 years) and I can guarrantee you that there is a huge contingent of Higher Middle and High Income earning NRIs who are investing / planning (actually not planning!!) for thier retirements like blind men in dark alleys. All these guys need serious professional assistance /planning / advice. However all we have in the Gulf region is the so called personal finance experts wo generally work for a Mutual Fund / Insurance Company / Broking Company, who actually push some product or the other in the name of financial advising / planning. Please note that all these so called experts are Indian Expatriates who are trying to take the NRIs out here for a ride!
One Financial Planner in India (who I met in Bangalore, in August 2009) did not even alert me to the fact that I had one too many endowement / moneyback LIC policies (13 in all and my total annual premium was Rs. 4.15 Lakhs for a coverage of Rs. 70, Lakhs). When I asked him about my insurance policies he said my policies were good!All he was interested in was to get me to invest in Mutual Funds through his company wih a fee of 2.5% on each investment. This was in Aug 2009 after the entry loads on MFs was removed by SEBI. This Gentleman’s arguement was that he was charging the 2.5% fee for the professional service and research etc. that his company would be providing. Once I returned to Bahrain after my annual leave in Bangalore, I came across Manish’s Blog (Jago Investor in Sept 2009) which made me really wakeup to the mistake(s) that I had committed with regard to my insurance policies. I understood what a term policy was and in January this year, I visited Bangalore again to get myself a term policy for quite a large sum and a health policy and have discontinued all my 13 policies (which were just a year old and hence no use of making paid up or surrendering) as well. Had the above Financial Planner alerted me in Aug 2009, I would have probably saved 2 quarterly premiums (approx Rs 2 Lakhs) but all he wanted was my investment in MFs!!
I seriously hope that the Financial Planing community wakes up to the needs of the market and starts behaving ethically and professionally so that people who are in genuine need of financial planning can aproach financial planners without the fear of being taken for a ride. Also, I believe that with the increase in awareness among us Indians rearding various aspects of personal finance, there will be a very large clientele in the coming years who will be looking to seek the services of professionally qualified (and honest and ethical!!) financial planners. I would like to end my comment by saying that ‘the business is surely there for the financial planners and it is for them to loose the business!!’
P.S. – I am actually thinking of acquiring the CFP qualification and use my qualification to plan my own finance!! Wouldn’t this be better than having to trust an unknown financial planner and his advice (or the lack of it)?? I know this is a bit far fetched but I would rather dig my own well to ensure my water supply instead of relying on the unreliable, unethical and unprofessional water supply that is available otherwise.
@ Venky
“I am actually thinking of acquiring the CFP qualification and use my
qualification to plan my own finance!!”
I have taught about this many times too! Two issues: cost of education should be considerable (for me) and like every other course, class room coaching is good but field experience teaches you better!.
CFP website has nice quiz. Have you taken it?
I will bet Manish has! Given his enthu. I started to take it but felt bored midway!
Pattu
Which quiz ? where ? Looks like I missed it
Manish
Mock tests with sample paper and working notes can be found here:
http://www.fpsb.co.in/scripts/CFPCertification.aspx
Pattu
I feel everyone should try to take the tests if they have good knowledge about financial planning . Atleast they will know whats the gap between then and professional
Manish
I ‘m not FP… But over a period I learn few things, continuously interacting with client facing question which induce me to search for an answer. which slowly upgrade my level of knowledge upto certain level… where I can able to understand things… most importantly I start thinking way one FP thinks while diagnosing their patient financial status.
Still I think certified Planner is one who suppose to understand and possess in-depth knowledge and ability to tailor made the strategies after properly conducting the need base analysis of client. But having said that. If client trusting them blindly and taking their given advice n implement it in complete belief that it will surely help him/her to met the goal he/she sets for them self in life. Then responsibility of FP is double because the consequences of their bad advice may hamper the future plan of client or result into some monitory loss.
Akhil
Yes, the most important thing is to find out answers ourself upto some level
. You have made good points here 
Manish
lol Manish, ULIP still best….;) if you say I offer you good plan with 85% return
hehe
Venky
‘
Nice to get your detailed comment . U have some great points here .
Nice to hear about the opportunities in Bahrain , I am sure many will find good planners now in india and avail their services. regarding the services of that planner you met in bangalore , its the same thing what i said in the article. Most of the planners do not have the motivation to actually work on your plan , but rather sell the products only .
Regarding your comment on “I am actually thinking of acuiring CFP and doing your own planning” , Pattu has comment on that already , but i would also like to comment that
Its some thing like you have a diesease and then you are saying i will become a doctor and treat myself . leave aside cost , its not everyone cup of tea , i am not saying that its tough or something one cant do , but its really too much work to do just for your own financial planning, also you may not have interest in doing it for long term . so think about it .
manish
manish
Manish,
Thank you for your reply.
I’m glad to hear your viewpoint. It echoes exactly with what I think – and which was the reason I wrote my book “What Every Indian Should Know Before Investing”. You can check the contents of it on my site http://www.investjunction.com. I’m currently working on the second edition of it. I hope I can take your help with some of the chapters.
I really admire the way you are going about this blog. But I still wonder what’s the best way to go about communicating the need for financial planning to the ordinary Indian. I have a feeling a mix of Internet and Mobile would be the best. What do you think? I would love to hear your thoughts on it.
Vinod
.-= Vinod Pottayil´s last blog ..ULIPS – mixing ignorance with greed =-.
Vinod
Mobile + Internet , thats what covers not even 10% of the people in india for financial planning . Most of the market is tapped at root level like middle class and not just big cities , but smaller ones . there people dont understand anything other than FD’s and LIC . thats it ..
This is what we need to change truly if we want to change India . The real medium still I think is Newspapers , magazines . Internet is also a big contributer.
I saw your content , it looks good from the point of product knowledge , but it missing heavily on Psychology part . The book will teach then “What” and where is “Why” ?
manish
Nice Article Manish , though I agree with Pattu that it will be difficult to trust a Finance Planner ( for that mater finding one ) . In last few month when ever I get a cold call(around 10 times) about Finance / Investment planning , I ask them whether they are ready to give me a plan for a Fee and I’ll not use them as agent . Till now I have not got any +ve response .
Also one thing came to my mind while reading the comments. How many people realize that the need Finance Planning . I guess for 80% people who earn enough to save , Finance Planing means
)
1-What ever you can save put in in FD
2-Invest enough in LIC Endowment/ Money back plans to reach your 80C limit .(you should hear my Father in Law how he says he Financed his Daughters wedding using LIC endowment plans
-debashish
Debashish
I understand the problem of “Trust” . Its not easy, its like arranged marriage
where the risk is very high because you dont know who the other person is , we generally would like to have a affair for few months and would love to spend time with Financial planner for the long term relationship .
But thats the way it is
. Regarding your Father in Law comments , i have no solutions for them , Its too tough to make them understand them because they come from different generation where safety of money and trust was far far important that high returns and excitement 
. Ask them the retruns they made on their money and tell them the equivalent amount you can make if you were in their place , I am sure it would be a nice scene 
, just save your ass to be kicked 
)
What do you feel todays investors have differnet than our fore fathers which makes us better investors ? Do we ?
Manish
May be a few investors in our generation are better then our parents , in a way that they understand equity / asset allocation etc(i’ll put that at less then 5%)
Many people in our generation(50-60%) think its’ too early to invest . They spend all the salary by last week of the month. ( I did not save a single rupee in first 3-4 yrs of my Job )
The rest still take advice from their parents (save regularly in RD, purchase a house) , or worse take advice (??) from uncles who are LIC agents .
A statement from one of my team last week – ” I have a 3 year old ULIP , for which I have not paid premium last year. I am planning to pay 2 yrs premium this year so that I’ll get more tax saving ( what the @#$%)
Debashish
yes , nice points you have here . Old generation was savers , but not investors . This generation is worst now .. they are not savers also at the first hand , but then want to make lot of returns too ..
early investing is key to all the investing issues . So if one does not want to work hard , he can compromise on returns if he/she just invests early .
Regarding your friends , yes , his main focus is tax and in that process he is loosing the main thing , saving for his goals strategically . Ask him to come here . did you ?
Manish
I did give him the link to the blog and few articles on why ULIPs are not good . He never discussed the topic with me again
-debashish
Debashish
nice ,I am sure he is now a reader of this blog , may be a silent one
.
Manish
Debashish… I can still prove ULIP is not bad
ask manish…
Akhil
We are only saying ULIP’s may be unsuitable for most of the people , not “BAD” , I can handle ULIP better than MF , because of short term switching . “ULIP’s are bad” is not a general statement , its just true for most of the investors .
manish
Manish
Thanks for the quick feedback on my book. I agree with what you say. I had a reason for writing it in that way; maybe we can discuss it some other time.
Returning back to the idea of communicating about investments – Manish – who do you think needs knowledge about investing and financial planning more: the rich, the upper middle class, the middle class, the lower middle class, or the really poor? Whom would you like to reach out to if you were given a choice? Whose needs do you think is most urgent?
I agree that it’s necessary for all – to make sure anyone can protect and grow their wealth. But some sections of the society have a critical need for it I feel. Especially now. As you rightly pointed out in one of your answers – our previous generation probably didn’t have such a need; ours does. And the question is – how do we reach out to these people? How does one explain the “concept” of financial planning and the need for a financial planner to people when the concepts of saving and investing are still unclear.
Sorry if we are moving off topic, just thinking aloud….
Vinod
Vinod
very nice question
. I think the biggest need for financial planning in our country is for “Middle class” . leave aside poors , they have their own share of problems , they first need education , food and shelter , we need to plan for future goals with their current income , poor people dont have any of these unfortunately . While everybody needs it badly , i would say that middle class is the biggest market of financial planning. Again higher middle class is also a market, but then if they fail in financial planning also , they still make it and acheive everything . if they fail still their children get good education , their retirement is under control .
Manish
Good article Manish. As you have rightly pointed out, finding a good financial planner is a challenge because you never know their genuineness until a very long time. Recently , I got a call from Max New York life Insurance fellow saying that if I spare 30 mins he will do financial planning for me. The products he will suggest are obvious.
So most of the poeple hesitate to go for a FP because of all these factors. Agents must not disguise themselves as financial planners, then people might go for planners.
Swathi
It will take some more years for financial planning to come to a point where finding good financial planner becomes more easy than today . If you meet a CFP who claims to make a good financial plan for you . what all points will you make sure is there in that CFP ? Would like to hear what you think of this ?
This might help understand the perspective of everyone here .
Manish
Manish,
Nice article once again. Financial planning is need of an hour especially in present India. Today, 100% of the youth are behind making money but when it comes to best utilization of their earned money (Financial planning) I bet you won’t find more than 10%.
1. Most of the agents, sales executives call them self as planners, advisors and cheat investors with wrong products, which is my people loses trust part. So finding a right and establishing trust part is core part here.
2. Most people wonder, There exists a word “financial planning”
3. Indians are known for savings but not for investing. Most people save but does not plan to utilize their money at right time.
4. Education system does not teach the importance of financial planning.
5. Companies hire fresh graduates and put them on professional training but how many of them teach them about financial planning.
I see good growth for financial planners in coming days.
Srinivas
Nice points . I would like to take forward two main points you mentioned.
1. “Making money is easy , handling it is hard” , True , most of the people make good money and try and try for it but when it comes to grow it , they fail .. however a better deal would be that we try to make a little less and concentrate more on growing it well .. this way i think the second way would beat the first one .
2. Education system should teach us financial planning , atleast at the basic level we should know all the products and why managing money will be beneficial .
what are your views on these ? especially the 1st one ?
Manish
Hey Manish,
Long time since i posted a comment. Interesting topic this
I think one doesn’t need a financial planner if he/she has access to internet. Here is my take on this..
1)Put a substantial portion of money in FD no matter how low the interest rate is.
2)Invest in large cap diversified mutual fund thru SIP. You can also buy when there is a heavy correction.
3)Dont buy large cap stocks. (2 already covers it). Buy under valued mid cap small cap stocks. (Do your own analysis. don’t go by tips etc). You can even buy some penny stocks
in small quantity and forget it.
4) For tax saving go for ELSS. (But dont buy in a hurry at the last moment. Buy on dips)
5)For insurance take term insurance. Dont take any insurance if you think your family can live with the current wealth.
6)Live in a rented house until you are convinced that the property you are buying is not overvalued. ( Today there is no connect between the rent and the emi).
7) Last but not the least, never lend money to anybody no matter how close they are. (Unless threes a genuine reson like critical illness etc). People dont return at all.
Tejas
I do not agree entirely with it. How come everyone do their financial planning from internet ? first thing is most of the people in india do not have access to net , other thing is people do not have interest to find out and manage things on their own , may be personally you like to do it and you will succeed. I would like to point other things points of yours .
1. For putting money in FD , what is the time frame you are looking at , will you advice people to invest in FD for many years like 10+ yrs ?
3. Buy small caps which are undevalued, how easy do you think it is for average people, fund managers also do that and they fail . its not easy .
other points are good
. nice work
Manish
As somone who must be reading a lot about finance, do you find any particular newspaper/magazine that covers financial news or gives financial content in a user-friendly manner?
I’m familiar with the writings in the DNA, HT, TOI and the Mint. I find the Mint the best of the lot. I also like the coverage of DNA, especially the writings by Vivek Kaul.
Any recommendations for your readers?
Vinod
Vinod
regular magazines like outlook money and Money outlook at good options to get updated . I also find Mint to be good one , especuially Monika Halan updates . can you share some links from Vivek Paul .
Manish
manish,
a good article..
what i feel, it is not dat a person can’t plan his finance…..but the major thing is if a person is well disciplined and a logical thinker then he can manage his finace in a well way.the main point comes are..
1). a person shud be clear of his goals..( that’s the major point as most of the world population won’t be confident of his goals…most of the people wud be earning without having any goal set in mind)
2). He / she should gather a good knowledge of personal finance through internet, and magazines, and news channels ( rather then consulting to his neighbour uncle/aunty/relatives & investing money in some bullshit products without knowing for wat purpose he/she is doing it)..
3). Then considering his/her riskappetite , he/she should choose those product which shud be inline with his/her goal..( means each investment shud be for a purpose…)
4). and for his reference one can use various calculators, provided on various websites like
* http://www.consultskyler.com (even it will give u a clear picture hw much u will accumulate through EPF at ur retiring age)
*www.invetmentkit.com etc.
* hdfcmutualfund.com ( there are many calculators which can give you a very good idea, and even can provide a financial plan also,according to ur input data)
web sites like..
* http://www.itrust.com ( have some financial planning samples..)
* http://www.investmentyogi.com ( provides basic finace plan for free..)
But overall if a person is well discipliend & goal oriented & have patience, regarding every aspects of his life (not only finance)..then he can do it….
A very simple thing is that..” to judge someone, first u have to judge urself whether r u able to judge other or not”..means first u have to educate urself enough in dat field….
same case is here….if you don’t know much, then hw can u follow ur finance plannner advices?
or y to have a insect in ur mind ( doubtful)..?..
AND if u have educated urself in personal finance & u r confident…then u can plan it also..
but if u r in doubtful situation then u can take the help of FP ( finance planner )…
but first educate urself is most important thing….[:)]
@ PATTU: i am agree with you…
what u say manish…
regards
varun
Varun
Wow .. thats an amazing comment with lots of detials and some bold comments
. You have given some very nice insights and food for thoughts to everyone . Nice link for calculator 
Your steps 1,2,3,4 are very nice and if one follows that i am sure they would be benefitted a lot . Not that everyone can become a financial planner by themselvesm, but yes ,using a financial planner services and understanding them is definately going to happen .
Good work . This is what a client has to do from their side. Do you have views on what should happen from FP side ?
manish
Manish,
This is the link to Vivek’s writings: http://www.dnaindia.com/columns/vivek-kaul
I do not know if everything that he writes in DNA appears here.
Vinod
Vinod
thanks for the links . I am sure readers will benefit with his writings
manish
I feel a good FP should have the below qualities:
1.Understand client’s risk appetite- not by asking what is your risk appetite.Give your client situations and ask questions to understand risk appetite.
2.Estimate a realistic return.
3.Should not hesitate to tell clients that they cannot meet their goals ( with realistic returns) if they aim too high.
4.Should not sell products for commission.In fact he should teach his clients how to choose a fund and give them 5-6 choices.
5.Stand on his decision even when funds suggested by him are not performing and explain the reason to clients.
6.Give references of earlier clients.
Swathi
I am glad to hear these points from you . The reason is that All these 6 points are true for me . I follow each of the points with my clients for whom I do planning for fee .
Some of the points I would like to highlight .
2. Having a realistic returns . Some planners are too aggresive and take equity returns in range of 16-20% just because a) they themselves are aggresive and b) given the funds performance for last 5-6 yrs , they conclude that 16% is realistic . I dont disagree that funds cant give 16% return , just that we have to take margin of safety and make sure that even in worst case things are achieved .
5. This is important . this is linked to confidence . Financial plan is long term commitement and the underlying principles should never be changed. If a planner has suggested a mutua fund and its return does not figure out in top 10 , it does not mean that he suggests a change just on this reason .
Good points over all . Did you see Any financial planner personally ?
Manish
Well written article. I’ve posted a link to your article on my internet forum that was created for financial planners.
http://financialplanningexchange.com/forum/general-public-discussion/264-how-hire-financial-planner-india.html
Bryan
Thanks for the link . I was amazed to see that you said that “Its the same situation in US” , is it true , I tought its well regulated in US .
Manish
hi manish
Thanks for ur appreciation
as i am also new and learning a lot abt personal finance.
and the thing dat i told was the sum of my thoughts regarding personal finance till now?…
@ adding to the points of swathi
the things dat i wud like to see in a financial planner are..
1). He should not be a greedy person, means his focus shud not be to dat how to take the benefit out of my client ( as it is happening )?..
2).He shud be able to judge the risk appetite of his client by client’s thinking , his personality, his way of talking, his confidence level, and by giving some good tricky example to him?.and then he shud conclude./..coz if u are asking directly to a person what is ur risk appetite, then i think more then 80% people will give the wrong answer..so if the FP is same as like a doctor,then he shud have a strong ability to judge it?
3). He also shud be able to find whether client is greedy or not?..means client is expecting more returns in every product advised by him. that is easily understood by more conversation with him.
4).A plan is zero..without having GOAL…means he shud have a good & frankly discussion with client on his goal?
5). He shud talk to the clients in a way so dat client cud be comfortable with him,and atleast client cud believe him if not trust…( and dat thing is possible only if FP is not a money oriented person himself?..)
6).he shud be true to himself..no cleverness,..no cunningness..shud be like a friend forever..[ not like he advise only if he will get paid, or he will advise only according to his payment ? .]
7).He shud not sell any product ( as i personally feels ), coz wat i think if he is selling product by himself then client will not take him seriously, coz client wud be having a doubt in his mind dat he himself is selling product and he is taking benefit out of me..and FP will loss the client’s confidence in him?
8).He shud take the proper feedback of client’s and keep on boosting his moral and confidence …even after the client is not taking his service ( dat will show ur care for the client..and
a very good example is :
a washing machine comapny IFB , they people call & even personally visit to the customers whose machines are out of warranty..and advise how to take care of the machine..will cleans the machine by theirself in front of u…even to some customers they will call and say happy birthday to u sir….say this is called the human behaviour..and they are not forcing to anyone to take their recommened product…but really they care…)
9). he shud tell his client abt how to gain some knowledge regarding finance,shud say follow this magazines..websites,news papers..etc.?
10).He also shud considers the risk factors in a finance plan ( suppose tomorrow market is down and no fund is performing , and at that time he shud boost confidence of his client dat dear have patience my plan will work..)
10.)And once he has made a plan , he shud be confident that yes if my client stick to my advices then definitely he will achieve his all goal…
that is what i think about a FP….
i dont know practically it is possible or not….( coz he , himself is having a family….)
But i know, if a FP is genuine ..he can do it…may be will be doing..and will keep on doing[:)]
…
what u say manish….
regards.
varun agrawal
Varun
Very very nice points . All your points make sense 100% and its possible , but lets see how it goes in our country in coming decade
I would like to take forward your 7th point .
“He shud not sell any product”. I agree with it . However here are clients who like to take FP help on this . So what I would say is its not totally feasible to say that “FP should not sell products” . I think FP can help clients execute the plan through a channel or a network of sellers , so that client does not have to roam around finding things . This involves risk and now everything resides on a good planner . He shouls have integrity that for his personal benefit he will not sell the products .
Manish
No I haven’t seen any FP personally. I am doing it for myself [:P]
Swathi
nice to know that , it shows the confidence . Incase you have learned most of the stuff here , its an honour
Manish
thanks manish,
yaa my meaning was..rather than selling the products by himself, he can guide to the clients,where they can get it easily,without any hassle..
and if the FP is taking a proper Feedback then i dn’t think he wud let the client to go here and there../..
But he shud recommend any agency or channel for buying product without having any commision ( means he shud be true to his job?..)
as gandhi ji once told,
” Honesty for your profession, and dedication for the work are the two keys of success..”
what u say manish..?.m i right?..[:)]
regards,
varun agrawal
…
Varun
For most of the part I agree with you . But for what you said “But he shud recommend any agency or channel for buying product without having any commision” . there is some other view from my side .
Why cant financial planner take some commision from the seller if he recommends a client . After all its a revenue model and everyone wants to make money . as far as FP is ethical in recommending a product and sends you to the right place , he should be allowed to get some share of commisions seller is making . The only wrong part is when his main intention for sending you to seller is that he is making money and he overlooks your needs .
As far as a client is taken care properly . I think its fine . just imagine that FP has advised you to take some insurance , now anyways you are going to get hold of some agent and taka the policy and agent will make say Rs 1000 . Now What if the FP has a network of agents and he gives your reference of these agents (without compromising the quality of service and without biasness) .
Now if you go through this agent and he gets 1000 , 50% of this can be shared with FP which can be their own arrangement . I dont find any issues with this unless there is no compromise on ethics .
What do you say ?
manish
manish ,
it depends on individual…how will he react on this thing?…
every client has different mind set and different thinking../..
and most of the indian mass may not be thinking in dat way or taking it positively….
like it is said..
” in this kalyug, person is not so happy with his hapinnes, that much he is sad with other’s happiness..”
but for me…or the person who knows and understands the things well…for them there will be no problem…..
coz after all u are getting benefitted….
what’s ur opinion…
regards,
varun
Yes , Mostly I agree with your point , the person has to understand that his happiness is because of his own things and not others .
Manish
Hi Hemant,
There are so many firms who have started fee based Financial planning in North with astarting fee of Rs.10000.
I too started 6 months back fee based and non fee based.But i kept feebased at a lower price reason being i felt middle class was still ignored in this new concept when they are in need of the same.
Are funancial planning companies going in teh same direction as financial indutsry went-First target high incomegroup and later appraoch lower middle class if required.
What are your views on teh fee structure of many companies in Financial Planning.Rs.10000 is startung fee across all companies?
Jitedndra
Better mail Hemant on this , As no one gets notifications about the comments unless they have subcribed to this article comments . Regarding your question .I will tell you my view
You are correct when you say that Middle class is in some way ignored , HNI are the main target for most of the financial planner especially if they are a commision based ones , But there are some companies and some financial planner who are try to give better service and target middle class too . We actually have to target lower middle class and middle middle class for financial planning to make it more beneficial .they need it the most .
Thats my view
Manish
Hi Manish,
First of all congratulations for such an great blog.I am preparing for CFP’s last module.
I completely agree with your views on FP,India has long long way to go in FP and that’s also true that everyone thinks FP is just selling MF and LI. I am working at Udaipur, Rajasthan and struggling to acknowledge me as an Financial Planner .
struggling a lot to get clients and many time thinks to leave this field altogether,but one thing keeps me going is my passion towards this field.
Vikas
I can understand the problem . Forget Udaipur , even Mumbai and Bangalore have similar issues
. First try to gain the confidence of individuals by providing them education and unbiased advice . It will take time but people will start beleiveing you and you will get success . It takes time and CFP is no different 
Manish
Hi,
I believe lack of awareness,not about products,but about Planning is a hindrance in our profession.No customer will deny you if you approach.But if asked for paying a fee,he will think many times because this he has never heard of.So unless customers are not aware about a fee based advisory concept they will not pay you.
Lets put ourselves in place of our clients.How many of us thought of a fee based advisory.If CFP profession hasn’t come to india would we thinking on this line.It was there in HNIs segment but not in retail.
So there is lot to be done to reach to the masses-
-First awareness need to be created which we are doing
-We need to have different business models.A low fee based model will at least bring clients to the forefront of accepting you.Gradually this can be increased once a client is satisfied by your value added services.
In my view just adding CFP to our name will not help us.We might have to think a bit differently to work in indian context.
Jitendra
Why not !! . Adding CFP mark should be sufficient from certification point of view . Most important thing is giving unbiased advice without fees , you have to educate the customers , infact random people out of whom a small percentage will become your customers .
Manish
Hi Manish/ all,
I am new to this blog. I could see some very interesting discussion happening here.
It is great to know that people at least realize the importance of planning their finances…thanks to your blog.
But I can see there is lot of apprehension about hiring a one. People who are in Metros and have access to internet feel they can do it themselves with the free help available but what they don’t realize is that The process of Financial Planning is not only about putting some data in excel sheet or retirement calculator and printing some 20-30 nice looking pages. which ultimately leads you to buying certain products only.
Rather it is a ‘Consulting Exercise’. Here a planner try to understand the current situation not only financial but also emotional, health related and professional as well. The recommendations can range from curtailing your expenses to the appropriate usage of credit card, investing in a mutual fund to making a will and opening a locker. My clients relate to me all their worries. My responsibility as a planner becomes to make them financially healthy not only today but secure them even for years to come.
I hope soon people will realize this and even the planners will start behaving like TRUE Planners.
You are doing a great job!
Shilpi
Shilpi
Nice thoughts . I accept what you say is correct . People are now realising importance of financial planning . Still they think its something they can do because they dont understand the things which go in between, they see the end result which is “Where to invest , how much to invest and how to invest” , they are not aware of the process and thoughts which go in between . So they think this all can be done just by themselves .
Other thing is less number of quality professional in pure consulting , I know very less my self
. I am sure in coming days people like you can help in growing this field . Good luck 
Manish
I have seen the sample pdf which was posted here by sombody related to online services which do financial planning online for there client to be honest… I found it utter waste (talking for sample only) which i seen…. if that’s how really financial planning conducted out… my advice is learn to manage your own fund, why not if you learn the way t0 earn it……
Manish,
Experiences like these are cause of concern. Its important for us to understand what general public imagines as financial planning. Showing some half cooked plans and mathematical jamboree will not impress anybody (at least not logical persons)…we need to reach out more and clear all myths about financial planning. We need a large scale awareness campagain. Even a survey on ‘What is Financial Planning’ will be helpful.
shilpi
Shilpi
I accept that , but a simple plan based on some mathematical forumula’s can give atleast some plan which is “no plan” at all .. I accept that we need to tweak it a lot for making it better, that is the final result, but some basic plan will help starting things ? No ?
Anyways , we have to see that even that simple plan is good or not , just some magic will not be tolerated . What are your views ?
Manish
Akhil
May be you are pointing to Investmentyogi link which does basic financial planning , I think its a good thing considering that its fruitful for any investors at basic level . he can get very basic plan atleast , its always better than having nothing .
Manish
Manish,
By the way I misssed to Thank you!
Of course None of us can claim to know a lot…but this is why we are required to keep updating our knowledge and earn Continuous Education points to keep our Certified Financial Planner status intact.
shilpi
Shilpi
Yes , we all need to learn constantly as this space is so changing every other day/month/year
.
Manish
Ya Manish, you are right something is better than nothing! But at the same time if this half baked knowledge is adding to the confusion and tarnishing our image, we must be careful.
This will have ripple effect. We will loose the ground before launching ourselves. I hope someday Akhil will meet some real planner and will get to understand the meaning of Financial Planning!
shilpi
Ya , I agree to that .
So a client should have basic knowledge himself to understand if the plan is result of half baked knowledge or professional financial planning . Education is important . Nice discussion from yourside
. Keep it up .
Manish
Manish,
.. which one is Investmentyogi? link hmm.. I guess I have seen some different one…
Akhil
See this :
http://investmentyogi.com/login.aspx?ReturnUrl=%2fuser%2ffinprofile.aspx%3foption%3d3&option=3
lol shilpi, will share the experience surely with jago readers…
Hi,
I have met many clients who are knowledgable enough to do their basic financial planning.But the main problem lies in execution.They are not able to execute and review.
In my opinion a Financial Planner is more helpful in executing a Financial Plan for an investor.Timely review,Change in Investment strategies and Portfolios,Right Investment Avenues are key factors why an investor hire a financial planner (Based on experience i have with my investors).Every website gives Future Value of Present Expenses.But sometimes an individual laugh or get scared by looking at figures (especially retirement which run into crores).What a website cannot tell is how to achieve a good retirement corpus with an individual existing resources?
Through my experience i have realised, a financial planner is hired not only to tell an investor what he will require in future and how to spend but mainly how to execute it.And this is case with an investor earning 15000 p.m. and an investor earning 3 lakh p.m.All investor fall in same basket when it comes to execution.(This also includes IIM and IITs).
Jitendra
“Financial Planner is more helpful in executing a Financial Plan” , i would take that with a pinch of disagreement , In our country most of the people would first require for planning only , and just planning part, which is mostly thinking and applying financial planning principles .
I agree with you for HNI’s as they dont have time for all this execution-vexecution
Most of the middle level investors can do the execution themselves , financial planners should mainly be motivator for execution .
What do you think ?
Manish
Manish,
I Fully agree with you that first its planning then only execution can happen and every individual require Financial Planning.
My view was that all investors do sone kind of basic planning initially.I mean if i have a child i will certainly be doing some basic investment knowing what today’s college expense cost.If an individual has two child then he/she certainly will be on some basic investment pattern.Yes what they don’t foresee is what they will actually require 15-20 years hence.
Now meet an individual in thirtees and working in IT sector then he/she would have done some calculation with all the information avaialable today.(Although IT guys are very good in Excel and they can calculate all future values in a very good manner).
My line of saying was even with so much information and working on some basic calculations what they are not able to do is Execution.(This is my experience with clients from IT sector).
So a Financial Planner apart from doing Financial Planning helps a client in Executing in more effecient and discipline manner.
Jitendra
Yes , I would agree to that point , just knowledge is not assurance that the execution will be smooth . So a financial planner is helpful in that sense
Manish
@Akhil, we are looking forward to hear from you:)