The Hindu Business Line : `Wealth creation is a process, not a one-off miracle'

FINANCIAL planning will some day be a rule rather than an exception in India. Or so claims Mr Ranjeet Mudholkar, CEO of Association of Financial Planners, a relatively new organisation that has emerged as the licensing authority for the CFP (Certified Financial Planner) mark in the country.

"Insurance reforms have happened and the pensions sector is getting liberalised. These developments will boost financial planners. But first, the market has to realise that financial planning is a complete profession", he told Business Line.

Excerpts:

One controversy after another is rocking the world of investment. Is there a lesson in this for financial planners?

I agree that certain contentious issues have come up lately, each of which has left a trail of debate behind it. These have collectively led to a challenging situation for financial planners. Most of the issues have underlined the need for planning. Today there is an even greater need to consult planners.

In fact, there are lessons not for planners alone. The government and the investor community, as they go forward, should particularly take note of all the recent happenings and learn from them. Such developments should not come in the way of clients who wish to strike a fiduciary relationship with their advisors.

The basic idea is to generate investor confidence, perhaps by directing more resources towards meeting that objective. The Association has been trying to convey this to the authorities for some time. We are also telling investors that their allocations should be based on life goals and not triggered by various short-term objectives.

`From savers to investors' is still a myth in India. Do you agree?

Well, there are no absolute numbers that can be readily referred to. But there are some obvious signs that changes are indeed happening.

In this regard, let me tell you that our intention is simple: Convince more people to become part of the system. We don't need just well-informed investors and large intermediaries to establish a market. Instead, we need to create a good base through the involvement of quality people. Investors and planners should come closer to one another. Establishment of SROs (self regulated organisations) may in a way encourage their interaction.

Is there a global benchmark for planners that can be immediately applied to India?

We went to an international convention of financial planners, held in Malaysia last month, and found that no one can act or pose as a financial planner unless he or she holds a CFP registration. Regulators in a few other countries too have framed similar legislations.

Malaysia, where this law was introduced very recently, is not unlike India. Both are developing economies. If they can have a rule like this, we too can put in place something similar. The point is, when you need medical treatment, you will have to visit a doctor as quacks can go wrong on many counts.

Wealth creation is a process, not a one-off miracle that can be aided by those who pretend to know everything. Clients will have to realise there is a body of knowledge that can be tapped. This body has been recognised by a particular organisation, which has instituted a process of certification for its members.

Certified planners will be a transparent lot and the market has to be convinced about this.

More Stories on : Interview | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Do not overstretch the broking machine

MIPs — rough road ahead?

Negative sentiment pervades all corners

Bear mauling spares none

`Exits' and entrances

`Wealth creation is a process, not a one-off miracle'