Choose a financial planner who asks the right questions, says Noel Maye

Look for someone who has the CFP certification. Talk to more than one planner, suggests Maye

In many countries, certified financial planners (CFPs) can renew their certification by participating in continuous education programmes. In India, they need to take an exam every three years. NOEL MAYE, chief executive officer, Financial Planning Standards Board, the body that offers the CFP certification, tells Sanjay Kumar Singh they are engaging with the Indian regulator to bring about parity on this count. Edited excerpts:

While awareness about the need for expert professional advice is growing, people are often reluctant to pay a financial planner’s fee. Why should they take a CFP professional’s advice?

People are often not fully aware of what financial planning is and how their lives can benefit from it. At FPSB, we spend a lot of time communicating how having a plan, making structured financial decisions, and understanding the different financial decisions they make can help them lead the lives they want to.

Having a CFP professional who’s trained, understands financial matters, is committed to competence and ethics, and works as a partner with people to advise them is the way to go.

Why should people go to somebody who has a CFP designation?

CFP professionals are trained to take a holistic view of a person’s financial situation. They don’t start talking to clients about products in the first meeting. Instead, they enquire about their goals, dreams, what they want to do for their children and parents, and so on. Then they put together a plan that can help clients achieve all that. They pick suitable products that work for their clients. CFP professionals also help clients stay on track as they move towards their goals.

What would your advice be to someone trying to choose a financial planner?

Look for someone who has the CFP certification. Talk to more than one planner. It’s a very personal relationship and one of trust. Choose one you are comfortable working with, whom you can talk to openly, and who asks the right questions.

Ask the planner about his experience. Enquire whether the planner works with other clients who are in a similar situation as you.

Understand how the planner will charge for his services. Once you have chosen a planner, be an active participant in that professional relationship.

The number of CFP professionals in India is rather low.

There are 2,338 CFP professionals in India and over 203,000 worldwide. There’s a lot more room to grow in India.

Last year, we worked on fully localised textbooks for the Indian marketplace. We also think there’s an opportunity to do a better job of connecting young people with employers. We have started having conversations with large firms and employers in India. We are talking to them about how they can support people who are looking to get the CFP certification and create suitable environments in those firms, so that people can have successful careers in financial planning.

We will also work on connecting young CFP professionals in India to other markets where we have CFP certification, like Canada (17,000 CFPs) and the US (92,000 CFPs), so that Indian CFP professionals can have attractive careers internationally.

In India, CFP professionals have to give examinations every three years. In other geographies, they have to participate in continuous education programmes.

The global standard for CFP certification is that you complete several years of education, take an examination, and have three years of experience. Then you abide by a code of ethics. To renew your certification, you complete around 15 hours of continuing professional development every two years.  

In India, for individuals using our certification to be recognised by the National Institute of Securities Markets (NISM) for investment advisor registration, NISM has said people need to retake the examination — I believe it’s every three years — to be able to use the certifications to register for an investment advisor licence. At this point, that’s the law. We’re making sure our programme complies with NISM standards.

However, we have written to the regulator to say we still believe continuing professional development delivered well is an appropriate measure of ongoing competence. Ultimately, our desire would be that there’s recognition for the value of continuing education as an appropriate way of maintaining competence.