Nilanjan Dey, Director, Wishlist Capital Advisors provides time-tested advice to those wanting to join the ranks of Financial Advisors. Even veterans will find it useful. Read on
Is there an ideal way to start a financial advisory business? Countless people, wanting to start a new venture, have lost sleep over this question, and if history is any guide, countless others will. Well, you do need to start, as Sir John Templeton had once famously said. However, one has to seriously resolve to become a financial advisor.
Financial advising can be a rewarding career. The need for financial planners will rise exponentially as the high economic growth is expected to lead to increased prosperity among a greater number of people. More number of people will aspire to efficiently manage their finances. And they will need help in doing this.
Right now, the entry barriers to become a financial planner are very low. The only mandatory requirement is to clear an exam called Mutual Fund Distributors Certification conducted by National Institute of Securities Market (NISM). Also, it is not really a capital intensive business. However it is advisable that a new-comer has to have a basic set of resources at his disposal – infrastructure, office, staff etc. So, some basic investment is advisable to create a platform for success.
The first and foremost requirement to start as a financial advisor is to have adequate knowledge about financial planning and investments. Also, there is a need to have a sound understanding of financial markets regulations and tax laws. So, acquiring knowledge is an essential step for starting off as a financial advisor. Also, the aspiring advisor should be willing to invest continually in gaining knowledge
The other essential aspect of establishing a successful financial advisory business is relationship building. Winning the trust and confidence of clients are key to any relationship, more so when it involves the delicate issue of money.
“The genuine test lies in relationship building. Yes, we are referring to more or less the same exercise that is conducted every day by people who sell sundry concepts to consumers. The one ‘difference’ here is a financial advisor is a dream merchant. He helps clients manage their finances better, and as a result, makes them feel satisfied and contented. An efficient financial advisor, naturally, is trailed by a number of gratified clients”
Integrity and ethics are the other pillars of a good and successful financial advisory business.
Financial planners need to take their role very seriously. Financial planners need to recognise their fiduciary duties. They need to put the interests of their clients ahead of theirs. A financial planner must never consider himself as someone just selling investments.
Milestones to Success
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Create relationships built on mutual trust and respect
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Solve problems and offer solutions, educate and inform
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Increase client pool / assets under advice pool
Remember, all this, and more, will be determined by the latest legislations. If, for instance, the law-makers have amended norms related to commission-earnings, the financial advisor’s practice would have to be re-worked. The latest happenings in the Indian market for mutual funds, led by regulatory changes, are a case in point.
Generation of goodwill is vital. A client-advisor relationship must, over time, lead to added goodwill. Just as Rome was not built in a day, this will not happen in a day. It may take plenty of time – most certainly, it will take plenty of effort. At the end, a financial advisor must operate with an open mind; he needs to educate and train himself repeatedly, with a view to render better service. There is no end to acquisition of knowledge, and this is a fact that the financial advisor must realize early on in his career.
