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Business News/ Money / Calculators/  Financial planners focus spotlight on skills

Financial planners focus spotlight on skills

ISO stamp, CFP qualification, Sebi licence and others help advisers stand out in a crowd

Hemant Mishra, Sameer Joshi, Aniruddha Chowdhury/MintPremium
Hemant Mishra, Sameer Joshi, Aniruddha Chowdhury/Mint

We’re still years away from practising the motto, Customer is King, but the financial advisory industry is taking baby steps towards it. Recently, Mumbai-based financial planner, Gaurav Mashruwala, got ISO: 9001:2008 certification. ISO, or International Organization for Standardization, is a Switzerland-based non-government organization that lays down quality standards for industrial performance and customer service. Service providers or manufacturers the world over and across fields use this certification as an indication of high quality.

Mashruwala, however, is not the first financial planner in India to be ISO accredited. Others such as Dilshad Billimoria from Bangalore and Sanjeev Govila from Delhi are also ISO 9001:2008 certified.

Financial planners are slowly getting sensitized to the need to upgrade skills and get additional accreditation to stand out from the crowd. Bangalore-based financial planner Lovaii Navlakhi was recently adjudged the first runner-up for Asia in the PlanPlus Global Financial Planning Awards by PlanPlus Inc., a global firm that makes financial planning software tools. The awards also had American and European segments.

But do these awards or certificates add much value to us—the investors?

Sadique Neelgund, founder of Network FP, a firm that trains aspiring financial planners, feels such credentials help build trust with customers. “Many professionals earn and use credentials to build their profile, which helps them establish trust with new prospects. Doctors, accountants, architects, and now financial planners, use such credentials," added Neelgund.

These credentials are an indication of a professional’s ability to deliver quality services, which indirectly helps in marketability. “The onus is on advisers to educate and establish their credentials," said Neelgund.

But do consumers know about these? “Most of my clients have been with me for 12 years now, on an average, so there is no change in how they perceive me. But my new clients do appreciate it," said Dilshad Billimoria. “They go to the website of Financial Planning Standards Board (FPSB), India, to validate my Certified Financial Planner (CFP) certification. (FPSB is the governing body responsible for the CFP qualification.) They also validate my ISO accreditation as well as my Sebi investment adviser registration on the Internet. So, yes, clients are quite aware and they do checks and look at our qualifications, very closely," she added. Billimoria is perhaps India’s only financial planner to have an ISO accreditation as well as registration with Securities and Exchange Board of India (Sebi) as investment adviser. She had started her independent career as an MF distributor in 2001, and became a financial planner in 2008. In 2012, she got her ISO accreditation; this is valid for three years but is subject to an annual audit.

Making a mark

The size of the Indian distribution industry is worth 7.72 trillion in terms of the MFs corpus that they manage. This is roughly 69% of the entire Indian MF industry that’s worth around 10 trillion. The rest—around 31% or 3.33 trillion (industry estimates)—are assets that come directly, bypassing distributors.

According to September 2014-end data by the Association of Mutual Funds of India (Amfi), there were around 90,000 registered individual MF distributors. They have an Amfi Registration Number (ARN), which is required if they want to sell MF schemes. Industry estimates, however, suggest that only about 5,000 distributors are actively selling MFs. And here’s where advisers are aiming to stand out from the crowd.

Not only Amfi, but Sebi, too, took steps to regulate distributors, in 2011. It laid down a four-point formula to identify India’s biggest distributors that it felt should adhere to some minimum standards when advising clients or simply distributing MFs to them.

Fund houses were also asked to disclose the total commissions that they pay to these distributors. Further, it also mandated that such distributors would need to separately earmark every transaction as either “Advisory" or “Execution Only".

In 2013, Sebi went a step ahead and started offering licences to become a Sebi-approved investment adviser, under new guidelines called Sebi Investment Advisers Regulations, 2013, subject to basic qualifications and operational standards. Alternatively some distributors and advisers also get the CFP qualification.

For the better

ISO standardization or awards are now slowly becoming more popular with advisers who want to be in this business for long.

“Our systems and processes have always been in place, but the ISO accreditation gives us a yardstick against which we can measure our performance," said Mashruwala. “Also, we discovered few key lacunae through our audit in our internal operations. (Spotting) these will help us further strengthen our processes," he added. Giving an example, he pointed out that fund houses have different procedures for the same activity (for instance, systematic investment plan registration). The ISO audit process helped his firm realize that they need to have a written record as a reference point so that processing clients’ forms becomes quicker. Another example was of understanding the importance of not just documentation, but also of keeping a written record of the progress made in collecting and processing a client’s documents at the time of on-boarding or investing, so that “precious time can be saved".

Navlakhi’s award was more about a real-life, financial planning case study competition “that had an international feel to it". His entry was about a client who was in the middle of shifting back to India after a working in the UK. The client was shifting his money, properties and investments from the UK to India, his pension from the US (as the employer was American), and at the same time, planning for his children, who would again go abroad in the future.

“This could be a particular case, but the due diligence that the award organizers did also made us aware of the importance of communication, why we chose the options that we chose, and helped us put down probability of achieving in case of priorities," said Navlakhi.

As the attention of the MF industry shifts gradually to the need to retain investors in the backdrop of numerous mis-selling instances and churning being brought to light, investment advisers and financial planners who are serious about their profession want to stand out and get noticed. May this tribe grow.

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Published: 20 Nov 2014, 06:00 PM IST
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