Covering various aspects ranging from the number of certified financial planners (CFPs), their role in financial planning, and the industry's growth potential, Krishan Mishra CEO of Financial Planning Standards Board (FPSB) India, in an interview with Teena Jain Kaushal, sheds light on the increasing demand for CFPs in India . He also delves into the significance of CFP certification, its international recognition, and the regulatory landscape. FPSB Ltd. and its global network administer CFP certification and other programmes in 27 countries including US, UK, Australia, Canada, Chinese Taipei, France, Germany, Hong Kong, and India. Edited excerpts:
BT: How many CFPs do we have in India, currently?
KM: As of December 2022, there are a total of 2,517 professionals in India, each contributing their expertise and knowledge to the realm of financial planning. These professionals have undergone rigorous training and demonstrated their commitment to upholding professional standards in financial planning. With their diverse skill sets and dedication, they are playing a crucial role in guiding individuals and families towards sound financial decisions and a secure future.
BT: How much is the pass rate?
KM: The pass rate for the exam stands at 55 per cent. This number reflects the determination and hard work put in by candidates aspiring to become competent financial planners. Through their dedication and perseverance, these individuals are not only gaining the necessary knowledge but also showcasing their commitment to achieving excellence in the field of financial planning.
BT: Are 2,517 CFPs enough for a huge country like India?
KM: Now actually from 2019 when we started off as a liaison office, there are some restrictions when you are a liaison office put by the Reserve Bank of India, wherein you can't solicit students in the market. So as a foreign organisation, you can just actually support the set of members and the students who are already there with you. You will not be able to sell it in the market. However, what we did is that we created a subsidiary now on December 22 and we are ready to go out of the market and make people aware about this qualification and this profession, so that awareness level will go up. Now I would not say that the number is sufficient. It is a very small fraction of the kind of population that we have. But we foresee a tremendous amount of growth. In fact, what I foresee is that we should be looking at least 10,000 CFPs by say 2027-2028. That's the number which is in my plan, and I have a very clear good idea that yes, we'll be able to achieve that.
The US has got 93,000 out of the 213,000 members. Given their population size we have got more potential, more opportunities. In fact, I can tell you that India is no more a developing nation practically. We are emerging towards becoming a developed nation very soon, so we are at that advanced stage right and this is recognized by all the people across the world.
We are going to increase the number of education partners in the country. Currently we have 15, we are looking at growing it to 50 at a very fast pace and we'll have more good quality education partners who are going to support the students on their journey. So that's there on the cards and we are also going to work very closely with the regulators and the government to ensure that we can disseminate this information to people at large. One is towards their help in terms of financial planning. And two is to how they can look forward to this as a profession.
BT: Is the FPSB India programme recognised internationally?
KM: The Financial Planning Standards Board in US, is a global professional body which sets the standards and also gives this global certification called Certified Financial Plan. India, as I said, it's a subsidiary of that. So, you may call us as the leading financial planning body of India, which is here to uphold the financial planning. We have got the right accreditations in place and CFP qualification and the marks are being owned by FPSB Limited directly. They're the owners.
BT: Do CFPs require RIA or any other licence to start an advisory business?
KM: This is an essential requirement if one wants to use his or her CFP certification to get SEBI’s Investment Advisor registration through NISM (National Institute of Securities markets). This is important if they aim to become a Registered Investment Adviser (RIA). In short, these steps ensure that CFP professionals have the right qualifications to begin their advisory journey effectively and in compliance with the necessary regulations.
BT: What are your views on the recent consultation paper released by Sebi on finfluencers?
KM: The guidelines provide definition of finfluencers, the revenue models, data privacy, and protection against misuse. The entire effort is being done to ensure trust, transparency and to create a society which is free from biased, uninformed advice. They have solicited suggestions on this by September 15. FPSB India stand by and applauds these efforts of SEBI, as implementation of these guidelines will lead to qualified and unbiased advisory in the future.
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BT: Can you share details about the CFP certification programme? How much does it cost?
KM: If you look at the qualification, it is divided into various modules. Level one is in investment planning. Level 2 is towards retirement planning. Level 3 is to towards risk management and estate planning. At the final level, we have got two courses to complete. One is a financial plan assessment wherein we ask the individuals to prepare a full-fledged financial plan for a client. That plan is assessed by a qualified CFP and once this assessment happens then they can go ahead and write the final examination.
They have to go through an ethics module which is a 5-hour course and then they have to write the examination. That followed by this they have to go for a one year of supervisory experience or three-year of unsupervised experience. Unsupervised means they are practicing on their own or something. Post that only they can apply for CFP certification, so they will not be known as CFPs till that time they don't complete all these things.
The best part is that you can actually get your experience before the qualification during the qualification after the qualification. So all these options are there. One can interchange also somebody who is more comfortable with retirement planning first, so that person can start with retirement and move to the next level, so that those changes can be done.
So that flexibility is there in terms of cost, the cost is not very expensive. I can tell you that it can be done within, say, when it comes to examination registration, it comes to over Rs 1 lakh. In addition to that, people pay between Rs 30,000 and Rs 50,000 towards tuitions.
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BT: Will CFP candidates be able to use the trademark in the logo?
KM: Once candidates have completed all the exams and obtained necessary work experience, they can apply for certification and start using the CFP trademark once certified as a CFP professional.
BT: High renewal cost seems to dissuade students from opting for the course. Do you plan to address this?
KM: The renewal rates for CFP certification are very affordable compared to the benefits. CFP certification gives you an opportunity to be part of a strong network of over 213,000 professionals spread across 27 countries who have committed to putting their clients' interests first.
CFP certification can also bring employment opportunities and help one to start their own business thereby providing employment to others. The best part is that it opens the gateway to this noble profession wherein you can impact the lives of people and empower them to make informed decisions towards their financial goals and help make India financially sustainable.
BT: What are the job prospects after getting CFP certification?
KM: After achieving CFP certification, numerous job opportunities await in India and abroad, spanning both the private and public sectors. CFP professionals have a wide array of career paths to choose from. These possibilities encompass roles such as financial planning consultancy, investment, banking, risk management, relationship management, office administration, portfolio management, educator and more. During the course, students receive thorough training that equips them with the skills needed to tackle challenges in various fields. Upon graduation, they have access to a range of potential job roles.
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