For a new person is it worth being an IFA? – Independent Financial Advisor for those who do not know what is an IFA.
My take is if you are professionally qualified and can get a decent job in the outside world, it is not worth being an Ifa. We recruit Chartered Accountants at Rs. 6-7 lakhs a year, and MBAs at Rs. 3-6 lakhs – depending upon the college that they attend and the work which they are doing.
For an IFA to earn this kind of money is well impossible. Let us assume that there will be expenses of telephone, travel and conveyance of about Rs. 10,000 a month. The total income that the IFA should earn is approximately Rs. 820,000. As there will be no trail – for the next 2-3 years, he/she will have to live on the upfront commission.
To earn Rs. 820,000 at 0.5% upfront commission, the sales will have to be about Rs. 16 crores.
For an ordinary IFA this is not just impossible, I doubt if there are more than 1000 IFAs (all India!!) with this kind of Aum after so many years’ effort :).
So the logic is if you are planning to be an IFA – i.e. by choice (which means you can get a Rs. 5-7 lakh job) …DO NOT DO SO. The math does not work.
However if you want to be an IFA because you cannot get any other job, or you have to run your father’s business, …or any other compulsions…BEST OF LUCK. Hopefully over the next 10 years, many current IFAs will drop out, some will die, some will retire…so there will be some growth for you.
Not sure what are the views of the I F A community? Have to ask IFA Galaxy…:)
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