Dear Businessologist,
Being an extrovert, I love meeting people. That said, I plan to leave my boring job in the finance department and become a wealth planner full-time before this year ends. I think I can earn better too. My excitement was cut short after I noticed that to become a wealth planner, I must undergo quite a number of exams and certifications. Besides snakes, the exam is the second thing I hate the most as I had a couple of bad experiences with them during my schooling days. To me, exams are truly a showstopper here. Should I just bite the bullet, swallow it and move on with my dream?
Shay from Segamat, Malaysia
Hello Shay,
When it comes to becoming a financial or wealth planner, there are a few things that a person needs to take note of if they are considering going down the career path. Entry into the financial planning industry is easy since anyone from any industry can join. However, having a solid financial background would definitely give a bit of an edge.
The early journey of a financial or wealth planner is quite straightforward. In the case of insurance, the financial planner would be required to take an exam to be given a license to either handle conventional insurance or takaful insurance or even in some instances both. Some may be concerned with having to take an exam for the license. However, to them I would ask, did you have to take an exam to get a driver’s license? Why?
We all had to take driving lessons and go through a driving assessment because this is to make sure we understand the rules of the road and practice safe driving. The concept is the same as the exam to ensure that the financial planner truly understands on how to use their financial tool. A planner’s advice doesn’t just end when the product is sold but will have a lasting effect on a client’s financial situation in the future.
As a start, the responsibilities of a financial or wealth planner is not to sell a product such as insurance, unit trust or etc but instead, it is to assist the people we meet or prospects as we call them in planning their finances to be financially healthy and to be aligned with their goals for the future. This is why how we position ourselves is very important to move forward in the financial planning industry.
Are the exams difficult? Being ill-prepared for any exam would definitely be difficult for anyone but with a bit of learning and practice, passing the exam for the license is rather easy because it is simply for a license, not a certified title or academic achievement.
However, moving forward, after a few years in the belt, a financial or wealth planner will have the option to work towards gaining certain titles to increase their credibility such as being a Certified Financial Planner or Certified Financial Analyst. To qualify for them, there will be a number of exams that must be completed and as most of you can already guess, they may not be easy.
Are these qualifications necessary to be a financial and wealth planner? No, because regardless, financial planners are still able to meet people, discuss their financial health and help prepare a good plan.
Will having them help you? Definitely. Those titles are irrefutable evidence that you really know what you are doing and will serve as a source of confidence when meeting prospects.
As you can somewhat already see up to this point, a financial planner’s job is always to be out and about to meet, connect and build relationships with as many people as possible and position themselves as a professional who can assist them with their financial planning. There exist a slight misconception that most people need to plan their finances by themselves and would choose not to consult a financial planner. If a person gets injured and is hurting, they would search for a doctor to get treatment and medication. The reason they choose to see doctors is that they trust them as professionals and honestly believe doctors can help save them.
However, if a person has a small injury and doesn’t notice it, they would not seek a doctor for treatment. Why would they? They had no reason to think that they had to. But, as time passes, that injury can fester and worsen and by the time it becomes noticeable, it may be too late or too difficult to treat.
The same can be said about financial planning. Regardless of whether they are earning a low, average or high income, there may be a leak in their financial boat and the only way to plug it would be to start talking about a financial plan.
Especially for high-income earners, by not having a good financial plan, they may just earn the moniker of a Financial HENRY which stands for High Earner Not Rich Yet.
So if a planner says there are just no prospects because the general public prefers to plan for themselves, it is simply because they had positioned themselves as a salesperson such as an insurance sales agent rather than a professional financial planner.
A financial or wealth planner’s first job would be to help prospects identify the leaks first before doing anything because if we can’t find out what the problem is, then what would we be trying to solve?
There are steps when it comes to financial planning that needs to be discussed accordingly when coming up with a financial or wealth plan. If we push too much on financial protection with little to no savings or investment, it would then be a bad financial plan as their wealth is not growing. If we push too much on savings or investment with little to no financial protection, it is not a good financial plan because in times of crisis, they may not have enough funds to cover their expenses and may be forced to lower their standard of living.
The first step of financial planning is to go through the financial pyramid which starts with protection.
Protection refers to securing a set amount of funds to cover a person’s expenses should anything happens that stops the person from earning an income. Essentially making sure that there is money to spend on commitments without lowering their standard of living if an unfavourable event such as the death of a breadwinner or struck with a critical illness were to occur.
What are they going to do then? How are they going to cover their expenses? Will there be other sources of income?
This is where the financial tool, insurance, plays a part. However, insurance is not a one solution for all. In the same way that you can’t use a knife to eat soup or a spoon to cut steak, different types of insurance covers different types of risk. Identifying the best one for each different prospects that solves each of their unique problems is the mark of a good financial planner.
Secondly, once their wealth is protected, a financial planner can then focus on their savings. The common practice is to set aside a percentage of a person’s income for the sake of growing their savings. A very good practice where in the context of Malaysia, the savings are then placed into a savings account, EPF, ASB, a Tabung Haji account and in some cases a fixed deposit. A financial planner may use these or other financial tools designed to prepare for retirement to avoid a situation where a person would be forced to work in their old age.
Thirdly would be to create an investment portfolio that suits the client’s investment appetite. The purpose of an investment is to grow wealth at a faster and better rate than any type of savings. When it comes to investment, there are three major categories with the first being low risk with low return. Secondly, medium risk with medium return and lastly high risk with high return. By using investment tools such as unit trust, shares and etc, a financial or wealth planner assists their clients in creating an investment portfolio that they are comfortable with. Diversifying is always a sound strategy because as the saying goes, don’t put all your eggs in one basket.
A good financial plan, created through proper discussion, review and recommendations is what turns a person from a being a sales agent into a proper wealth and financial planner.
These perfectly describes the job process of a financial or wealth planner. We start with meeting people, build relationships, assist them to be aware of potential leaks in their finance planning, help them to create a financial plan that solves their problems and everyone walks away happy and satisfied.
But wait, is a financial planner’s journey done here? Of course not.
Up to this point, this piece had mostly discussed financial planning from the perspective of personal finances. However, there is a much larger variety of financial planning we can venture into such as estate and property deferment planning, business planning, corporate planning and etc. The road a financial planner walks is a never-ending cycle of learning and helping as many people as we can to be financially healthy and independent.
So, when considering going down this rabbit hole and committing to the financial planning industry, the only question left to ask is are you doing this to be a salesperson or to be a professional financial planner?
Once you understand how you want to position yourself, other obstacles such as exams and learning new things would become easy to overcome. Becoming a financial or wealth planner is not just another job but a commitment to help others because our consultations will affect their lives well into the future and with sound advice, a better future.
This answer was furnished by Azrul Muzaffar. He is a financial planner who dabbles in planning for personal finances, estate planning, retirement planning, tax planning as well as business and corporate planning. An advocate of the Financial Independent Retire Early (F.I.R.E) movement and loves to assist like-minded people to be able to retire early. A supporter of wildlife conservation efforts in preserving and protecting endangered species of land and marine animals with the firm belief it is our responsibility to do so as a society.
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