Do you agree that there is a big difference between a roadside chemist and a doctor?
A chemist/medical shop is like a dispensing unit, show them a prescription and they give you the medicine. Can a chemist EVER write a prescription? This is just how significant is the difference between a broker/agent and a Certified Financial PlannerCM. The latter is qualified professionally and licensed to render sound financial advice.
Let us go back to the basics and understand what Financial Planning is and how it works.
What is Financial Planning?
Firstly, it is important to dispel all myths and stories around Financial Planning.
Almost 99% people today do not have a clear understanding of Financial Planning, thanks to the institutions who have been grossly misusing the word 'Financial Planning' and misguiding the masses so far. Just think, can you call yourself a chartered accountant or an orthopaedic surgeon overnight?
Financial Planning is about 'Planning Life', it is about 'Strategy', it is about 'Knowing' where in life do you stand financially, it is about 'Taking Control', it is about having 'Accountability' for each rupee you own, it is about 'Exploring Possibilities' from limited budgets, it is about 'Achieving' what seemed impossible so far. Sounds abstract. . . well, Financial Planning is about lessons in life management first and money management second.
Defining objective/s is the focus of planning, quantifying what you want without thinking of affordability and availability is the premises of planning and making a strategy to achieve the predefined objective is the crux of planning.
Financial Planning is 95% strategy and 5% choosing products. Wondering why? It is easy to understand. Consider you want to travel from point A to point B. You then have various options like taking a train, bus, taxi, aeroplane etc. Choosing a product is just like choosing a vehicle. The vehicle/s may change mid journey as well, vehicles or product are totally irrelevant. It is the objective and the strategy that is important.
Here is the essential difference between a chemist and doctor. Or shall we say a broker/agent and a Financial Planner? 100% of a broker/agents job is just 5% work of a Financial Planner. The agent's world revolves around products and instruments, for the planner this is irrelevant.
Financial Planning is an independent and specialised job, a profession in its own right. Professionals have to undergo a process, exams and wisdom comes from years of experience. It is a matter of time before regulations on Financial Planning enter the Indian financial environment. I am given to understand that SEBI is working on this.
Beware!
It is time to dictate the quality of advice you deserve.
Kartik Jhaveri, an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik@transcend-india.com.
For more advice on financial planning, log on to www.moneycontrol.com.
Disclaimer:
The contents of the above articles are the intellectual property and copyright of the author, Kartik Jhaveri. No part may be used or reproduced in any form or manner. This article is purely educative and you are strongly advised to consult an expert prior to taking any significant decision. If you choose to act upon the information contained in the above article it is at your own risk.
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