If yes, In this article, you will learn all that you should know about various key points related to becoming a Financial Advisor in India – who is a financial advisor, what a financial advisor does, eligibility criteria, skills required, regulatory requirements, certifications one can undertake to improve their profile and build a career in the financial industry, future career opportunities, and challenges.
Who is a Financial Advisor?
A financial advisor is a professional who gives financial advice to their clients and help them achieve their life goals. They undertake financial planning for their clients which is the process of meeting their life goals through the proper management of finances. Life goals can include buying a home, savings for your child’s education, planning for retirement or estate planning. A major part of a financial advisor’s job is to make clients feel comfortable and establish trust with them. They have to keep abreast of the current happenings in the market and have to provide unbiased advice to their clients.
As with any other professional, being a financial advisor also comes with a lot of responsibility. A financial advisor manages the finances of other persons. A person having knowledge, desired passion and an ever-growing interest can be a good financial advisor. When you become a financial advisor, you’re not entering into a new field or getting yourself a job, you’re making a lifetime commitment with this profession.
Financial advisors help people make decisions about their finances, including investment in different financial instruments, taxation planning, insurance, debt, and other financial decisions.
“You are working with your client, towards supporting their financial goals and objectives, with no actual conflict of interest”.
Financial advisors tend to be predominantly enterprising individuals, which means that they are usually quite natural leaders who thrive at influencing and persuading others. They also tend to be detail-oriented and organized, and like working in a structured environment.
“Planning is taking the future into the present so that you can plan something about it now and secure it”
What does a Financial Advisor do?
Financial advisors assess the financial needs of individuals and help them with investments (such as stocks and bonds), tax laws, and insurance decisions. They help clients plan for short-term and long-term goals, such as education expenses and retirement planning. Many also provide tax advice or suggest insurance on the basis of their requirements.
Personal financial advisors do the following:
- Establishing client-planner relationship.
- Meet with clients personally to discuss their financial goals
- Gathering all the information.
- Educating clients and answering all their questions about investment options and potential risks.
- Understanding their risk appetite and return expectations and recommend financial products
- Monitor client’s accounts on a regular basis and determine if changes are needed to improve account
- Research investment
- Provide specialized services such as tax planning, estate planning as well as retirement planning to the
Although most financial advisors offer advice on a wide range of topics, some specialize in areas such as retirement or risk management (evaluating how willing the investor is ready to take chances. And adjusting investments accordingly). After investing funds for a client, they, as well as the client, get regular reports of the investments. They monitor the client’s investments and usually meet with each client regularly to update him/her on potential investments and to adjust the financial plan because of the client’s changed circumstances or because of investment options have changed.
These clients can also be the institutional investors (commonly companies or organizations), and they approach investing differently from the general public.
What is the scope of ‘Financial Advisory Business’ in India?
Wealth Management & Financial Advisory industry is likely expected to grow at around 15-25% yearly over the next decade looking at the current rate of population of the country and increasing disposable income of the retail as well as HNI clients.
Personal financial advisors are not just for wealthy people. Every individual can benefit from objective help to create, grow, accumulate and utilize wealth to fulfill one’s personal goals, family goals and other lifestyle objectives systematically without any anxiety. Financial planners can guide individuals to achieve their ultimate aim of spending retired life peacefully without compromising on living standards.
A qualified financial advisor provides advice on:
- Systematic savings
- Cash flow management
- Debt management
- Assets allocation for investment
- Managing risk through insurance planning
- Tax strategies to increase investible surplus
- Distribute residual wealth through estate planning.
Financial advisory is a profession for people with good communication skills combined with knowledge of how the financial service industry works. As a financial advisor, one could work for a bank, insurance company, a brokerage house or have one’s own practice.
Most important is to understand that the suitability of products you are guiding people to purchase is based on their risk appetite, age and time frame of goals and objectives.
A Financial Advisor needs to update themselves constantly on new products, services and tax laws that might be good for their clients. This is a field that requires a lifetime of continuing education. A trusted financial planner can play an important role in people’s lives, helping them to achieve dreams such as owning a home, seeing their children’s education and enjoying an active retirement.
Eligibility Criteria for becoming a financial advisor
Fee-Only Financial Advisor
In India, not everyone can offer & charge for investment advice. They have to be registered as an Investment Adviser (RIA) with SEBI if you want to charge fees for giving investment advice.
SEBI Regulation does not fix any minimum or maximum fee to be charged by the Investment Adviser from clients. It is as per the agreement between the client and the investment adviser. So, if you want to be a ‘Fee Charging’ Financial Advisor you need to be registered with SEBI as a Registered Investment Advisor.
Skills required to become a Financial Advisor
A successful Financial Planner requires a set of skills, most people expertise in a couple of areas. Here are the top 6 essential skills.
Communications and Interpersonal Skills
A financial advisor needs to solicit new businesses, network with associated people, and maintain his or her relationship with clients. Therefore, the ability to relate to people and have common grounds is crucial. Basic skills for networking, such as telephone and email etiquette are included in this. Additionally, the financial industry is filled with jargon. The documents are often complex and confusing. A Financial Planner needs to explain everything clearly to his or her client to make an informed decision. If building a new relationship is important, then retaining one is just as important to the business.
Ability to Handle Stress
Like most careers, stress at work is inevitable. A Financial Planner undertakes his or her clients’ financial portfolio and assist them in decisions that will have a major impact on their future. This process requires a Financial Planner to perform at an exceptionally high level and hence, it is stressful. On the other hand, the returns, when a Financial Planner helps the client to avoid financial disasters, it is more stressful.
Energy and Persistence
This key skill is required in any profession as it serves not only in the area of prospecting and serving clients. It also becomes extremely valuable when keeping tab of the investment market. Staying on top of the latest news and riding upward trends, in performance also.
Analytical Skills for Problem Solving
Each client’s financial portfolio is unique and requires different planning. A Financial Planner has to be able to exercise patience in different situations and with little emotional attachments. A Financial Planner must have strong problem solving and mathematical skills to help his or her client make prudent financial decisions.
Passion
Another essential skill in businesses is the enthusiasm for the job. The challenge is in finding that perfect fit. Financial Planner’s interest is in making a profound impact on the lives of others. By helping them to grow their wealth and secure an otherwise uncertain future that will make the difference.
Organizational Skills and Attention to Details
Organizational skills can be applied for good time management. It help to grow a Financial Planner’s clientele & his or her income too. Moreover, allocating the time efficiently & effectively ensures that a Financial Planner serves his or her clients well.
Companies entrust a Financial Planner to manage their finances and risks about the same. Paying attention to all the important & relevant details leave no stones unturned and eliminates small mistakes which can sometimes be very costly to a business.
Overview
In combination with these all 6 essential skills, having the right company to work that can provide you with the right balance of support, mentorship, training and independence can make a great difference and help Financial Planner on the way to a long-lasting and successful career.
If you feel that you have the above skills or could work to develop your skills. Then financial planning could be the right career for you. Whether you are starting as your first job or making a career transition.