Presentation By: Team FPSB India Financial Advisory Business- How to Transform it to the Next Level Financial Planning Standards Board India 702, 7 th Floor, Leela Business Park Andheri-Kurla Road, Andheri (E) Mumbai – 400059 Phone: +91 22 61712424, Fax: +91 22 61712444 Email: [email protected], Website: www.fpsbindia.org
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Financial Advisory Business- How to Transform it to the … Advisory... · Financial Advisory Business- How to Transform it to the Next Level Financial Planning Standards Board India
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Presentation By: Team FPSB India
Financial Advisory Business- How to Transform it to the Next Level
Understanding the current Financial Advisory Industry
Selling Preferences of Financial IntermediariesBusiness Profile
Age Profile
* Source: IIMS Dataworks 2008
LI : Life Insurance Financial Intermediaries’ profile is not restricted to a single product or service
Scope for skilled employment generation at varying age profiles
The FPA and Ameriprise Value of Financial Planning Study
• A Financial Planning Association survey sponsored by Ameriprise Financialand conducted by Harris Interactive shows how critical the pairing of aprofessional financial planner and the creation of a comprehensivefinancial plan can be to an individual‘s long term financial success.
• Consumer confidence is near historic lows, yet one group is feelingoptimistic and on track to meet their financial goals including retirement—people in a comprehensive financial planning relationship.
• In fact, they are nearly twice as likely to report feeling confident abouttheir financial future as those without paid, professional support.
Study is conducted in US in the month of June/July 2008
Contents
I. Current Scenario & Challenges
II. What does a personal finance customer want from an Independent Financial Advisor (IFA) today?
III. Where are you? Assess yourself
IV. The Way Forward
V. Questions & Answers
But…….
Who is an IFA?
Questions Clients Ask - 1
―I‘ve just received an offer for a new job. Can you tell me if this salarystructure is in my best interests?‖
Ponder…
Is this asked of by every distributor? And if not, why?
The Answer Is Trust
―Integrity is what you are when no one is looking.‖
Questions Clients Ask - 2
―Which is the best Mutual Fund to invest in?‖
―Do I need insurance?‖
―Shall I sell this property now?‖
Competency Is Essential…
Knowledge is the only instrument of production that is not subject to diminishing returns.‖ --- J M Clark
…Without Complacency
―It‘s what you learn after you know it all that counts.‖ --- John Wooden, college basketball coach
IFA is the personal Financial Architect & CFO for his client, who
Understands needs, arrives at a budget
Makes the drawings, gets okay, converts to blueprint
Builds the house
Role of CFPCM Professionals
Contents
I. Current Scenario & Challenges
II. What does a personal finance customer want from an Independent Financial Advisor (IFA) today?
III. Where are you? Assess yourself
IV. The Way Forward
V. Questions & Answers
Top concerns of Advisors Today
Opportunities in No Entry Load Era
• Relationship becomes more advice and customer centric than transaction based
• Will open doors for Financial Planning
• Good advice will be appreciated and hence rewarded
• Customer service will be the key
• Knowledge is a must, hence certification becomes important
• Those who work in client's interest will be rewarded
Immediate Issues
Difficulty in putting a value to your service & advice
Building the right business model
Maintaining brokerage structure may be difficult and cumbersome and bulky
Technology – Online platforms with direct investments
Immediate cash-flow concerns
Hence…… establish a fee-based model !
What you should do next?
• Improve knowledge levels
• See if you can position yourself as a one stop shop for investment advice
• Establish client relationship & earn trust
• Have a sense of ownership of your clients
• Ensure continuous knowledge up gradation
• Charge a fee for your services
• Build your network
• Partner with people with expertise in a different area/function
Financial Planning = (Trust + Education)
Competence
Capability
(Education)Results
Character
Integrity
(Approach)Intent
Reasons for Client Retention as viewed by Clients and Advisors
Which orbit do you think today your Financial Advisory service belongs to?
In an average month, what proportion of time do you, as CRM, spend on the following activities ?
Which of the following best describes your business
model, now and in two years' time ?
How Important do you, as business head, rate the following
product/Service offerings in terms of serving your clients
over the next two years ?
Wealth Management
Reach your Next Level of Success: Questions to ask yourself
• Do you have so many clients that you provide it difficult to provide personal services to each one?
• Do you have a higher priority on attracting new clients or on providing the best possible service to your current clients?
A lesson from top CFP Certificants
To have a more successful practice you need to have a fewer, often higher quality clients, and serve them exceptionally well. Many advisors have done this by creating a transition plan that deliberately targets affluent clients and prepares their practice to offer a higher level of service through comprehensive Financial Planning.
Reach your Next Level of Success: Questions to ask yourself
• Do you have processes & structures in place in your business that enable you to efficiently meet your client‘s needs?
• Is enhancing your relationships and providing better service to your existing clients a top priority in your practice?
A lesson from top CFP Certificants
The more successful Financial Planners understand that one of the few aspects of the advisory business that can be never commoditized is the advisor-client relationship itself. They place a high priority in continually fostering and improvising client relationships.
Reach your Next Level of Success: Questions to ask yourself
• Do you think of yourself as a problem solver for your clients?
• Are you conducting your overall business in a way geared to providing real-life solutions to your client‘s real-life problems?
A lesson from top CFP Certificants
The more successful Financial Planners see their first job as solving problems for their clients. Selling them products is simply a means to this end.
Contents
I. Current Scenario & Challenges
II. What does a personal finance customer want from an Independent Financial Advisor (IFA) today?
III. Where are you? Assess yourself
IV. The Way Forward
V. Questions & Answers
Services of Future
Certification & Standards
Individual Level
Qualification/ Certifications
1.CFPCM
2. PGDFA
3. PGDFP
4. CRM ( FP)
Certification ( Product Centric)
1. AMFI
2. IRDA
3. NCFM
4. BSE
Organization Level
ISO Certifications
1. ISO 9001
2. ISO 27001
Rating Standards
Standards as Prescribed by FPSB
India
Benchmark in Financial Planning
Financial Planning Rating Model for Planners/Firms
Financial Planning Standards -Benchmarks for Organizations
Financial Planning Firm’s Positioning
Certification: Individual Level
CERTIFIED FINANCIAL PLANNERCM or CFPCM
CFP Certification- Most prestigious international certification program for Financial Advisors. Currently being offered in 23 countries.
Initial Certification - must meet the following four
initial certification requirements
(known as the four "Es"):
•Experience
•Education
•Examination
•Ethics
It is estimated that the earnings of a financial planner who is certified exceed those of a financial planner who is not by almost 33 percent.
Course Contents in CFPCM Certification Program
There are 6 modules:
Introduction to Financial Planning
Risk Analysis and Insurance Planning
Retirement Planning and Employee Benefits
Investment Planning
Tax Planning and Estate Planning
Advanced Financial Planning
1. Regular Pathway – to accomplish the ‗education‘ Criterion
• Enroll with any of FPSB India‘s authorized Education Provider
• Self Study Mode
2. Challenge Status Pathway for working Professionals :
• A candidate must fulfill the criterion of additional higher qualification or professional qualification as specified by FPSB India apart from Graduation degree
• At the time of enrollment a candidate must have minimum three years of full time work experience in Financial Services Industry or five year experience as self employed in financial services or in Finance related departments of other Industries
Pathway to CFPCM Certification
Why CFPCM Certification?
The Candidates undergo a thorough education program which empowers him/her with knowledge and skillsin multi-discipline financial services such as Investment, Insurance, Retirement solutions and Tax Advisory
A robust examination system evaluates their skills and knowledge
Adherence to the Code of Ethics and Professional Conduct by the Candidates
CFPCM Certification is awarded after conducting due verification of the profile credentials of the Candidatesand suitable due diligence
Continuing Education requirement is embedded in the CFPCM Certification, which ensures regular knowledgeand skills enhancement
CFPCM Certificants help bring the pieces together
Investments
Insurance
Lending
Integrated
Financial
Solution
Debt
Management
Estate
PlanningAdministrationAdministration
Reporting
Out Sourcing Buy Sell Agreements
Powers of Attorney
Wills
Cash, Tax, Debt
Management
STRENGTHS• Strong command on the subject.•National & International recognition.• Regulator and industry acceptance.
WEAKNESS• Limited access to Capital currently•Low awareness of CFPCM
Certification in investors currently.
OPPORTUNITIES • Unstructured market .• Growing demand from FinancialServices Sector.• Allied fields like training, contentdevelopment, etc.
THREATS• Substantial Increase in the numbers in future • First mover advantage absolutely critical. • Financial Institutions scaling up their capabilities
SWOT Analysis of a CFPCM Certificant
• Adding value to the advisory and scope of being able to command fees from the customers
• Managing Competition and Increase in Client Acquisition/Retention
• Alignment with Global Standards while employee becomes part of a league of professionals recognizedworldwide
• Transformation from Financial Chemist To Financial Doctors
• Proves that the employee/advisor has tested herself/himself against the best and has met the Challenge
• Expertise and Credibility of the employee/advisor as a Financial Planner is instantly communicated
Benefits of upgrading Professionals as CFPCM Practitioners
Business Opportunities
PrivateBanking
Retail Banking
WealthManagement
AssetManagement
N/ABrokerage
Transaction-based advisory
Low
High
High
ProfitMargins
Revenue Growth Rates
FPSB India
Financial Planning Standards Board India (FPSBI) is a public – private enterprise and a professional standards setting body that proactively guides the development and promotion of standards for financial planning professionals for the benefit of all stakeholders, viz. the Government, the Regulators, the Industry Associations, the Corporate, the media and the general Public.
INDUSTRY GIANTS HAVE COME TOGETHER TO ANNOUNCE THE BIRTH OF A REVOLUTION IN FINANCIAL PLANNING INDUSTRY
Recognition of CFPCM Certification & FPSB India
Regulatory
• FPSB India is an established Body of Knowledge for Financial Planning as an AcademicInstitution and Change Agent to evolve Regulatory Framework
• Various Papers prepared and presented by FPSB India to Regulators and the Government viz.IRDA, PFRDA, RBI, SEBI and Ministry of Finance and honorable mention of FPSB India at theOECD International Conference
Industry
• FPSB India is promoted up by 50 leading Financial Services Organizations
• The Charter Members of FPSB India have resolved to give first preference to CFPCM Certificantsin their respective recruitments
Media
• CFP Certification rated as the ―Gold Standard‖ in Financial Planning by the Wall Street Journal(Jan, 2003)
• CFP Certification acknowledged as one of the ―Upcoming Certifications‖ in Financial Services inIndia by The Week
Contents
I. Current Scenario & Challenges
II. What does a personal finance customer want from an Independent Financial Advisor (IFA) today?