The Hindu Business Line : How to help the wealthy manage their money

If wealth meant having financial assets of at least $1 million, how many Indians do you think would qualify? "More than 83,000 in 2005," is as per a study by Merrill Lynch and Cap Gemini SA that Sumit Sharma and Damien Ryan cite in their article dated September 8, posted on www.bloomberg.com. Their story is about `Barclays Plc, Britain's third-largest bank by market value' planning `to start a wealth-management unit in India and hire as many as 50 managers next year to win business from rich individuals in Asia's fourth-largest economy.'

Just the right time for Getting Started as a Financial Planner, with Jeffrey H. Rattiner's help. The book, from Viva (www.vivagroupindia.com), provides `a complete, systematic, turnkey framework for the aspiring planner to follow.' If you wonder if there would be any demand, the preface quotes from the forecast by the US Department of Labour thus: "As the number and complexity of investments rises, more individuals will look to financial advisers to help manage their money."

Rattiner offers a method that financial service professionals and also the non-financially trained individuals can use for graduating "from a transaction-oriented business model to one involving a step-by-step process." The key, as the author insists, is to adopt `a comprehensive client-first approach' so that it is possible to uncover more of what the client is looking for.

Another reason why it is necessary to serve the client well is because of an important shift in the basis of compensation for financial planners — `from higher-risk commissions to flat fees.' Planners can, as a result, be more independent and objective in their services. "Financial planners thus have differentiated themselves from securities traders. Planners have begun to thrive on their enhanced image as the adviser, not the salesperson."

Must-dos

The author lists `ten must-dos' to develop a financial planning practice. These key tasks include: Selecting a practice structure, preparing a business plan, finding a mentor, getting the credentials, creating an advisory board, and so on. The last item in the list is about developing and implementing `standardised procedures,' which Rattiner compacts into the acronym PIPRIM, a comprehensive six-step process for `a systematic approach.' He describes it thus: "Preliminary meeting with a client. Integrated goal setting and data-gathering. Putting it all together. Recommending solutions. Implementing the plan. Monitoring the plan."

Don't think of financial planning as a product `bought and consumed by the client,' exhorts the author. "Rather, financial planning is a cycle that constantly renews as client needs change over time." And the work is long-range, unlike as in the case of stock trading. "You and your clients are investing in a relationship that must weather short-term gains and setbacks."

How does one maintain client confidence? It is dependent not on the dollar gain from the financial plan but on `the integrity of your relationship and the financial planning system you employ,' enlightens Rattiner. "Your role is to help clients achieve financial well-being. This requires that you accept and occupy a position of trust."

A chapter on `the spectrum of financial planning' discusses the many disciplines that PFP (personal financial planning) encompasses. For instance, cash flow management is a crucial service area that can "play a significant role in the client's ability to reach a wide range of financial goals." Another practice avenue is insurance planning, where the financial planner helps clients `identify the risks that can keep them from attaining their personal financial goals'. Planning for investment, education, income-tax, retirement and estate are further fields for PFP.

Discussing `the art of client communication,' Rattiner writes, "Clients use words, space, tonality, rate, and volume of speech and other nonverbal actions to communicate." Watch out, common words can mean different things. "To one person, risk may mean going to Las Vegas with $100, while to another it may mean investing in futures."

Know that it is `more difficult to work with a husband and wife, father and son, or business partners than to plan with one person.' When working with a couple, for instance, you should communicate in such a manner that allows both the people understand the same message. Address both, advises Rattiner. "If you talk with one spouse when the other is unavailable and one partner later communicates the message to the other, it may be interpreted differently than you intended."

Clients have values

Sage wisdom for ambitious financial planners is to be genuine. "Let the client see you as a real person. You do not have to wear a different hat for each client. Be yourself at all times." The author emphasises also the importance of understanding the client's value system. "Your clients have moral values they live by," he reminds. "These moral values should tie in to the objectives they want to achieve... Every client has a definite idea of what is acceptable and what is not."

A planner can be a guiding light when clients come to him for "advice, guidance, and help with everything they refuse to deal with themselves, don't want to get involved with, or simply don't understand." As a planner, you are not required to dictate what the client should do, says Rattiner. You are only a sounding board, who can point out to what the clients can do now to achieve long-term success. "When a planner works with sincerity, understanding, and real-life compassion to help people maximise their current situation and be the best they can be, the rewards of the profession are boundless," concludes the author.

A book that can motivate you to take up financial planning as a career.

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