Reading this article on a fancy smartphone? Or a high-end laptop?
How do you think your parents were able to buy you such modern gadgets? Through making small savings every month and planning their wealth wisely. They probably had a individual/firm which periodically advised them how they could grow their wealth through different types of investments.
Similarly, organizations also take advice from such firms to plan their finances and grow their wealth. But who are these people and firms? What are they called? What do they do?
Let’s answer all these questions today!
Who is a financial planner?
A financial planner is like a consultant that every family needs! Right from looking after the investments to taxation, from retirement planning to estate planning – a Certified Financial planner can cover all the areas of personal finance. A financial planner helps an individual invest their money wisely and grow the same. He helps in budgeting, setting the goals and create a portfolio in such a way that all the financial goals of an individual are achieved.
What are the different areas that a financial planner looks into?
A certified financial planner looks after every aspect of personal finance. The key areas are as follows:
1. Investment planning
The primary component of financial planning. The planner understands the client’s financial goals and accordingly advises when, where and how much to invest.
2. Portfolio Management
It’s the financial planner’s job to select the right combination of stocks, gold, bonds, mutual funds, Govt. schemes for the client. The combination must be such that the client gets maximum profit with minimum risks involved.
3. Tax Planning & ITR Filing
Nobody likes paying taxes, and there are sure shot legal ways by which individuals can reduce the tax liabilities. As a financial planner, your job would be to analyze the financial situation of your client and make the best use of various tax exemptions, deductions and benefits to minimize the amount of taxes your client would have to pay.
Along with tax planning, your job as a financial planner would also mean that you may have to file your client’s Income Tax Returns.
4. Retirement Planning
It’s a dream for everyone to retire early and enjoy their life with their loved ones. But to retire early, a person needs to accumulate enough wealth so that he/she doesn’t have to be dependent on any other person. A financial planner helps in retirement planning in 2 ways – advising which scheme to invest in (such as NPS, APY, PPF etc.) & how much to invest at each life stage (during start, middle and end of your career) and ensure that the wealth lasts throughout the lifetime.
5. Will Writing & Estate Planning
During some point in life, a person will start thinking about his/her family’s financial security. As a financial planner, it’s your job to help your client secure all their assets with the help of a will. This would also help reduce future family disputes.
6. Wealth Management
What if you get Mukesh Ambani as your client? He wouldn’t be interested much in mutual funds, stocks etc. He would want to invest Lakhs of Rupees in a way that would earn him Crores of Rupees. A financial planner, in this case would turn into a wealth manager and he/she would be looking for opportunities to invest the client’s money in MNC’s, real estate etc. which give large returns.
7. Risk Management Through Insurance
Insurance is a necessity in 2022. Be it life insurance, term insurance, accidental insurance or any other form of personal insurance. But how do you know which insurance policy to purchase, how much coverage should be chosen? A financial planner helps you answer all these questions.
What are the various job opportunities that one can expect as a Certified Financial Planner?
As a financial planner, you shall be mainly working in the Banking, Financial services & Insurance industry. The key areas where one gets work opportunity are:
1. Banks & NBFC
2. Wealth Management firms
3. Family offices
4. Insurance industry
5. Financial planning firms
6. Individual practice
As a fresher one can expect a starting salary range from Rs. 2 to 5 lakhs per annum. As one gains experience, and reaches a senior level, a pay of Rs. 5 to 10 lakhs. Furthermore, years into the industry, one can expect a higher package of Rs. 10 lakhs plus.
The average costs for pursuing the CFP course in India ranges anywhere between Rs. 1 lakh to Rs. 1.5 lakes. Thus, you recover the entire costs to pursue CFP within few months of joining a corporate. The total fees payable to FPSB for the entire program is approx. $1197. However, under Proschool’s expert guidance, you can save up to $250 during the duration of the program.
So how can you become a Certified Financial Planner?
Well, if consulting clients on any of the above areas excites you, you should surely consider a career in the field of financial planning. To become a financial planner, one needs to complete the CFP program provided by Financial Planning Standards Boards (FPSB). CFP is the most renowned certification in the field of Personal Finance and is recognized in 27 countries.
The CFP Course is 12 to 18 months program and can be pursued along with college or job. Proschool takes pride in being one of the finest education providers for the CFP program.
Let us take you through the exam pattern and timeline for the CFP program –
1. Module 0: This is an introductory preparatory module provided specially by Proschool to get the basics cleared of the students. Here we shall be covering the Six steps of financial planning and key topics in financial mathematics.
Post the completion of this module, the student has to appear for the final assessment and score minimum 70% to qualify for the actual modules.
2. Now, once the preparatory module is cleared, the students can commence their other modules as follows:
A) Module 1 – Personal Finance Management & Investment Planning
B) Module 2 – Retirement & Tax planning module
C) Module 3 – Risk & Estate planning module
Each of the above mentioned module is covered in 2.5 -3 months in coaching followed by a 2-week preparatory leave to complete the FPSB exams.
Do note here, the FPSB exams are conducted every month and a candidate is free to select any month of their choice and finish off the exams.
3. Once a candidate has cleared all the three papers, he / she becomes eligible to appear for the final paper I.E., Integrated financial planning. Here the student must submit a financial plan provided by FPSB India. Once the plan has been completed satisfactorily, the student can book the 3-hour written exam and appear for the same.
Do note, the Final IFP exams are conducted every alternate month.
The average passing for CFP is anywhere between 45-55%. At Proschool, we have consistently delivered 60-65% passing.