Piecemeal buying of financial products to meet the salesperson’s targets, rather than your own financial goals, can prove to be hazardous in the long run. Mis-selling has been rampant in the industry, and penalties are being imposed on financial institutions to stall the trends. One needs to have a clear view of needs and available resources before engaging the services of a financial counsellor. Age, income, risk appetite, family responsibilities, distribution of financial assets, expected retirement age and the market conditions are all important, for any sensible investment to be made.
It makes it worthwhile to mention the Code of Ethics, Good Practices laid down by FPSB (Financial Planning Standards Board) India and CFP Board Guidelines here.
CODE OF ETHICS
- Client First
The client’s needs should always be on top priority.
This requires honesty, candor and transparency in all professional matters.
This requires a counsellor to be impartial, and exercise sound financial judgement.
This means that the client should get whatever is due and can be expected in a financial relationship.
This requires treating the client with dignity and respect, and maintaining confidentiality to the stipulated extent.
The financial planner needs to have the abilities, skills and knowledge. One needs to be qualified, aware of industry trends and open to constant learning.
It means allowing access to the client’s financial information only to authorised parties.
Services need to be provided in a planned and timely manner, without skipping any steps in the process.
- Defining the scope of the engagement
- Determining a client’s personal and financial goals, needs and priorities
- Obtaining quantitative information and documents
- Analysing and evaluating the client’s information
- Identifying and evaluating financial planning alternatives
- Developing the Financial Planning Recommendations
- Presenting the Financial Planning Recommendations
- Agreeing on implementing responsibilities
- Selecting products and services for implementation
- Defining Monitoring responsibilities.
CFP BOARD GUIDELINES FOR THE FINANCIAL PLANNING PROCESS
- Establish client-planner relationships
- Gather client data and determine goals and expectations
- Analyze and evaluate the client’s financial status
- Develop and present the financial plan
- Implement the financial plan
- Monitor the financial plan
Investors, check what you get for your money.