The regulatory environment is now looking good for a financial planner. However the business environment is not looking good at all. For a planner to run an office, pay rent, salaries, and other infra costs AND take enough money home to run his home too, the planning business is not lucrative enough. I also heard that the CA institute is likely to come out with a financial planning degree – albeit as a post qualification course, it augurs well for the profession.

Well for starters, I have to give you a caveat – regulators remain the same all over the world. The more powerful they are, the worse it is for the investor. Having said that SEBI needs to (in fact it must) create a regulation model for financial planners/ investment advisers and not just ‘hope’ that the regulatory body will do it. Hmmm far away I think.

Now read on: (mostly SEC view)

Finding the right financial planner can be a confusing process. (ha SEC recognises that it is a process, a nice beginning).

“Just like a grocery store offers more products than a convenience store, some financial professionals offer a wide range of products or services, while others offer a more limited selection,” the SEC bulletin says, after urging consumers to read all documents provided by a prospective planner before hiring him or her.

I seriously think this is a poor example. In a grocery store normally toxic products and food products are not kept together. Also medicines are sold by qualified people, liquor is sold only to people who have a permit, and tobacco is sold only to people over the age of 18. Not true in a FP’s office. All products are kept in one place, and the customer is not capable of knowing what is a generic product priced like a formulation. Or a toxic product not marked as such.

The SEC’s tips for investors include the following:

Do your homework and ask questions. (will somebody tell me what this means please?)

Find out whether the products and services available are right for you.(hey jerk if I had known this, I would have bought it online)

Understand how you’ll pay for services and products, and how your financial professional gets paid as well. (Sure!)
Ask about the financial professional’s experience and credentials.(In this alphabet soup of qualifications, how will I know the difference between CA, CFA, CPA, CFP, ICWA, MA, MBA, BCOM, BE, DR. ….). Thank you SEC.

Ask the financial professional if he or she has had a disciplinary history with a government regulator or had customer complaints. (and expect him to say the truth, thank you Sir)

The commission’s checklist of questions for investors covers three areas:

expectations from the relationships;

the planner’s experience and background;

and products.

The questions are as follows:

Expectations of the Relationship

How often should I expect to hear from you? And pray, why?
How often will you review my account or make recommendations to me?

Will you do things because it benefits me, or because it benefits you and the principals whom you represent?
If my investments aren’t doing well, will you call me and recommend something else?

And how will I know why you are doing this?
If I invest with you, how can I keep track of how well my investments are doing?

Do you design/sell some software that will do this- and how much does it cost please?

Experience and Background

What experience do you have, especially with people like me?

What percentage of your time would you estimate that you spend on people with situations and goals that are similar to mine?

What education have you had that relates to your work?

What professional licenses do you hold?

How long have you done this type of work?

Have you ever been disciplined by a regulator? If yes, what was the problem and how was it resolved?

Have you had customer complaints? If yes, how many, what were they about, and how were they resolved? ?


What type of products do you offer?
How many different products do you offer?
Do you offer “house” products? If so, what types of products are they, and do you receive any incentives for selling these products, or for maintaining them in a customer’s account? What kind of incentives are they?

Do you sell Loan products too?

Payments and Fees

Given my situation and what I’m looking for, what is the [best / most cost effective] way for me to pay for financial services? Why?

What are the fees that I will pay for products and services?

How and when will I see the fees I pay?

Which of those fees will I pay directly (such as a commission on a stock trade) and which are taken directly from the products I own (such as some mutual fund expenses)

How do you get paid?

If I invested  Rs. 1,000 with you today, approximately how much would you get paid during the following year, based on my investment?

Does someone else (such as a fund company or an insurance company) pay you for offering or selling these products or services?

…..more to come………

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  1. Good if CA’s start getting into this profession big time , will be nice for the community as people anyway share all the financial details with CA, would be the best way.

    But i feel ICAI should restrict the Finacial Advise CAs from practice & wise versa(Just like jobs), to create a a good specialisation.

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