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How to Become a Financial Advisor in India?
Do you want to become a financial advisor in India and make your career in the financial industry?
If yes, In this article, you will learn all that you should know about various key points related to becoming a Financial Advisor in India – who is a financial advisor, what a financial advisor does, eligibility criteria, skills required, regulatory requirements, certifications one can undertake to improve their profile and build a career in the financial industry, future career opportunities, and challenges.
Who is a Financial Advisor?
A financial advisor is a professional who gives financial advice to their clients and help them achieve their life goals. They undertake financial planning for their clients which is the process of meeting their life goals through the proper management of finances. Life goals can include buying a home, savings for your child’s education, planning for retirement or estate planning. A major part of a financial advisor’s job is to make clients feel comfortable and establish trust with them. They have to keep abreast of the current happenings in the market and have to provide unbiased advice to their clients.
As with any other professional, being a financial advisor also comes with a lot of responsibility. A financial advisor manages the finances of other persons. A person having knowledge, desired passion and an ever-growing interest can be a good financial advisor. When you become a financial advisor, you’re not entering into a new field or getting yourself a job, you’re making a lifetime commitment with this profession.
Financial advisors help people make decisions about their finances, including investment in different financial instruments, taxation planning, insurance, debt, and other financial decisions.
“You are working with your client, towards supporting their financial goals and objectives, with no actual conflict of interest”.
Financial advisors tend to be predominantly enterprising individuals, which means that they are usually quite natural leaders who thrive at influencing and persuading others. They also tend to be detail-oriented and organized, and like working in a structured environment.
“Planning is taking the future into the present so that you can plan something about it now and secure it”
The chart below can help you decide if a career as a financial planner might suit you.
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Degree Required |
Bachelor’s, but master’s can be beneficial |
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Education Field of Study |
Finance, law, business, accounting, or economics |
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Licensure Required |
Yes (if directly buying or selling stocks, bonds, or insurance policies or providing investment advice) |
What does a Financial Advisor do?
Financial advisors assess the financial needs of individuals and help them with investments (such as stocks and bonds), tax laws, and insurance decisions. They help clients plan for short-term and long-term goals, such as education expenses and retirement planning. Many also provide tax advice or suggest insurance on the basis of their requirements.
Personal financial advisors do the following:
- Establishing client-planner relationship.
- Meet with clients personally to discuss their financial goals
- Gathering all the information.
- Educating clients and answering all their questions about investment options and potential risks.
- Understanding their risk appetite and return expectations and recommend financial products
- Monitor client’s accounts on a regular basis and determine if changes are needed to improve account
- Research investment
- Provide specialized services such as tax planning, estate planning as well as retirement planning to the
Although most financial advisors offer advice on a wide range of topics, some specialize in areas such as retirement or risk management (evaluating how willing the investor is ready to take chances, and adjusting investments accordingly). After investing funds for a client, they, as well as the client, get regular reports of the investments. They monitor the client’s investments and usually meet with each client regularly to update him/her on potential investments and to adjust the financial plan because of the client’s changed circumstances or because of investment options have changed.
These clients can also be the institutional investors (commonly companies or organizations), and they approach investing differently from the general public.
Private bankers manages a collection of investments (known as a portfolio) for the clients with the help of resources of the bank, including teams of financial analysts, accountants, and other finance professionals.
Financial advisors spend a great part of time marketing their services. They meet potential clients by giving seminars, conferences or through business and social networking.
What is the scope of ‘Financial Advisory Business’ in India?
Wealth Management & Financial Advisory industry is likely expected to grow at around 15-25% yearly over the next decade looking at the current rate of population of the country and increasing disposable income of the retail as well as HNI clients.
Personal financial advisors are not just for wealthy people. Every individual can benefit from objective help to create, grow, accumulate and utilize wealth to fulfill one’s personal goals, family goals and other lifestyle objectives systematically without any anxiety. Financial planners can guide individuals to achieve their ultimate aim of spending retired life peacefully without compromising on living standards.
Eligibility Criteria for becoming a financial advisor
Fee-Only Financial Advisor
In India, not everyone can offer & charge for investment advice. They have to be registered as an Investment Adviser (RIA) with SEBI if you want to charge fees for giving investment advice.
SEBI Regulation does not fix any minimum or maximum fee to be charged by the Investment Adviser from clients. It is as per the agreement between the client and the investment adviser. So, if you want to be a ‘Fee Charging’ Financial Advisor you need to be registered with SEBI as a Registered Investment Advisor.
Read: SEBI RIA Regulations for More Details
Chartered Wealth Manager® (CWM®) Certification® is accredited by NISM under the SEBI Investment Advisor Regulations 2013 as an approved certification.
Commission Only Financial Advisor:
There are different exams to be cleared based on the Financial Product a Financial Advisor promotes. These exams are conducted by the regulatory body for the specific product.
For Mutual Funds selling a financial advisor have to clear the NISM-Series-V-A: Mutual Fund Distributors Certification Examination.
For Insurance Selling a Financial Advisor has to clear IRDA Examinations for Life Insurance and General Insurance.
To become Life Insurance Agent in India, a candidate should pass IRDAI IC 38 pre-recruitment qualification exam. To become General Insurance Agent in India, a candidate should pass the IRDA IC 38 Exam.
According to Regulation 4 of IRDA 2000, 12th Pass is considered as the minimum educational qualification for urban area inhabitants while the 10th pass is considered as the minimum educational qualification for rural area inhabitants. The minimum age limit is 18 years. You cannot directly appear for IC38, you need to be an insurer first at which you have to attend 50 hours of training by IRDA to be called a Life, General or Health Insurance Agent, while for first-timers, and it is 75 hours of training.
Skills required to become a Financial Advisor
A successful Financial Planner requires a set of skills, most people expertise in a couple of areas. Here are the top 6 essential skills.
- Communications and Interpersonal Skills
A financial advisor needs to solicit new businesses, network with associated people, and maintain his or her relationship with clients. Therefore, the ability to relate to people and have common grounds is crucial. Basic skills for networking, such as telephone and email etiquette are included in this. Additionally, the financial industry is filled with jargon. The documents are often complex and confusing. A Financial Planner needs to explain everything clearly to his or her client to make an informed decision. If building a new relationship is important, then retaining one is just as important to the business.
- Ability to Handle Stress
Like most careers, stress at work is inevitable. A Financial Planner undertakes his or her clients’ financial portfolio and assist them in decisions that will have a major impact on their future. This process requires a Financial Planner to perform at an exceptionally high level and hence, it is stressful. On the other hand, the returns, when a Financial Planner helps the client to avoid financial disasters, it is more stressful.
- Energy and Persistence
This key skill is required in any profession as it serves not only in the area of prospecting and serving clients, it also becomes extremely valuable when keeping tab of the investment market, staying on top of the latest news and riding upward trends, in performance also.
- Analytical Skills for Problem Solving
Each client’s financial portfolio is unique and requires different planning. A Financial Planner has to be able to exercise patience in different situations and with little emotional attachments. A Financial Planner must have strong problem solving and mathematical skills to help his or her client make prudent financial decisions.
- Passion
Another essential skill in businesses is the enthusiasm for the job. The challenge is in finding that perfect fit. Financial Planner’s interest is in making a profound impact on the lives of others, by helping them to grow their wealth and secure an otherwise uncertain future that will make the difference.
- Organizational Skills and Attention to Details
Organizational skills can be applied for good time management. It help to grow a Financial Planner’s clientele & his or her income too. Moreover, allocating the time efficiently & effectively ensures that a Financial Planner serves his or her clients well.
Companies entrust a Financial Planner to manage their finances and risks about the same. Paying attention to all the important & relevant details leave no stones unturned and eliminates small mistakes which can sometimes be very costly to a business.
What type of financial advisors are there?
The following are four types of financial advisors available to the public, and details on the types of services they provide:
Financial Planners
Financial advisors and financial planners are often used interchangeably. However, they are not the same thing.
Financial advisor is an umbrella term that refers to anyone who helps clients to manage their money. Financial planner, on the other hand, refers to a specific type of financial advisor that can help individuals and companies to meet their financial goals by formulating a plan.
Client goals can be anything from paying off debt, estate planning, child education, marriage or investing for retirement. Financial planners can give clients a big picture of how the financial market works, explain complex financial terms in simpler language and counsel their clients on the risks of different investments. Some financial planners only give advice, and some give advice as well as sell products.
Many financial planners decide to focus on one specialization, such as taxes, estate planning, retirement, or investments.
Hiring a financial planner isn’t cheap. However, hiring a financial planner can be worth the cost in certain situations, such as:
Wealth Management Advisors – If an individual earns a substantial amount of money, it makes sense to hire a financial planner to help with coordinating all the accounts, saving on taxes, investing wisely, and planning the estate.
Self-Employment – If an individual is a small business owner or a freelancer, it is hard to budget and to deal with issues such as quarterly tax filings, self-employment taxes, special deductions, employee pay and benefits, and retirement plans. A financial planner can help with sorting these issues out, and more.
Retirement – Individuals that are planning to retire need to sort out how much money they will need to live on, how to withdraw money from retirement accounts, and how to maximize Social Security benefits. Those who are younger and want to retire at a certain age with a certain amount of money available to them will need to know where to invest their money in, and how much they will need to put away each month in order to make that happen.
Family Planning – Individuals that are getting married and having children need to know how to combine finances, file taxes jointly, budget for their children’s university expenses, purchase life insurance, and plan their estate.
Investment Advisors
There is often a bit of confusion between what a financial planner can do for a client vs what an investment advisor can do. Both are alike in that they can help their clients with managing their assets, however, the services an investment advisor provides are strictly focused on investments.
Scope of a Financial Advisor
There are a large number of job openings for financial advisors in metro cities such as Delhi, Mumbai, and Bengaluru. Employment opportunities are high in fields such as brokerages, credit counseling firms, financial consultancies, fund managing companies, investment banks, life insurance companies, health insurance companies, wealth managing firms, etc. One will find opportunities in both the public and the private sectors. Some of the top recruiting private companies are HDFC, HSBC, ICICI, and Kotak Mahindra. The public sector insurance companies such as LIC and NIACL are also providing many job opportunities for financial advisors.
A qualified financial advisor can start his/her career with a basic package of 3.5 lakhs per annum or more. They can draw over 6 lakhs per annum or more with an experience of more than three years. The financial advisors who have the industry experience of more than fifteen years make an amount of more than 12 lakhs per annum, the sky is the limit for such experienced professionals.
There are a variety of financial professionals that are trained to offer specialized financial advice.
Are there any certification or licensure requirements?
Financial advisors who directly buy or sell stocks, bonds, mutual funds, insurance policies, or specific investment advice need a combination of licenses that varies based upon the products they sell. In addition to those licenses, smaller firms that manage clients’ investments must be registered with government regulators, and larger firms must be registered with whatever federal government agency regulates these services. Some advisors help their clients by buying and trading stocks, and they’ll need certain licenses. Even just giving advice related to investments requires a license. Financial advisors at insurance companies will also need licenses to sell and advise on insurance.
SEBI REGISTRATION AND GUIDELINES
In order to become a financial advisor and start your own practice, you need to register under SEBI guidelines and proceed as per the rules and regulations. Before the Securities and Exchange Board of India (SEBI) Registered Investment Advisor regulations, anyone could start working as an investment advisor without registering. But in order to protect the interests of investors, SEBI introduced the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013.
These regulations stipulate that investment advisers must register with SEBI. Once you become a Registered Investment Adviser (RIA), you can only receive compensation from the person you provide in order to prevent the conflicts of interest. These regulations clearly state that registration is mandatory for investment advisers. SEBI regulations exempt certain categories of people from registration such as insurance agents or brokers advising on insurance products, mutual fund distributors and stockbrokers.
Regulatory requirements to become a financial advisor
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Registered Investment Advisers (RIA) |
RIA can be an individual, a corporate or a partnership firm. RIA is legally eligible to give comprehensive advice including financial planning. |
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Who are registered RIAs? |
RIA can be an individual, a corporate or a partnership firm. |
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Prerequisite qualifications to register as a RIA |
Professional/ Post – graduate degree/ Post graduate diploma in finance or related topics. OR Graduate in any discipline with a minimum of 5 years of experience in financial advisory. |
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Certification |
Certification in Financial Planning/ Portfolio Management or Investment Advisory such as NISM Series XA and Series XB. Any Certification Accredited by NISM – like Chartered Wealth Manager (CWM). |
What are the capital adequacy requirements for opening your own practice?
An individual or partnership must have net tangible assets with a value of at least Rs.1 lakh, and a body corporate must have a net worth of at least Rs.25 lakhs.
COMPARISON CHART BETWEEN CHARTERED WEALTH MANAGER, CERTIFIED FINANCIAL PLANNER, AND CHARTERED FINANCIAL ANALYST
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PARAMETERS |
CHARTERED WEALTH MANAGER |
CERTIFIED FINANCIAL PLANNER |
CHARTERED FINANCIAL ANALYST |
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Website |
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Certificate Issuing Body |
American Academy of Financial Management, USA |
Financial Planning Standard Board India |
CFA Institute, US |
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Affiliation Body |
The CHARTERED WEALTH MANAGERTM (CWM) is offered by American Academy of Financial Management, US. |
The CERTIFIED FINANCIAL PLANNERCM (CFP) is offered by FPSB Ltd which was founded in 2004. |
The CHARTERED FINANCIAL ANALYST Is offered by the CFA Institute. |
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Global Certification |
The CWM certification is offered internationally across the globe. |
The CFP certification is offered in 24 countries including India. |
The CFA certification is offered internationally across the globe. |
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Output |
CHARTERED WEALTH MANAGERTM (CWM®) is Unique and the Premier Certification in Wealth Management certification in India. CWM certification is a professional qualification for aspiring candidates who want to establish their career in Wealth Management. |
CFP Certification covers all aspects of an individual’s personal finance needs like insurance, retirement, tax & estate, investment, etc. |
The CFA program is a globally recognized, graduate-level curriculum that provides a strong foundation of real-world investment analysis, portfolio management skills. The CFA program majorly focuses on corporate finance and not personal finance. |
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Courseware for the Certification |
The Courseware for the CWM certification is provided by AAFM India approved from AAFM, US. |
The Courseware for CFP certification is not provided by the FPSB India. The Education Providers themselves have to develop the content for the certification. |
The Courseware for the CFA certification is provided by the CFA Institute. |
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Course Completion Time |
Candidates take an average of 6 months to complete the entire program |
Candidates can take the exams a minimum of one month after registration; on an average, the entire program takes about one year |
Candidates take an average of 4 years to complete the entire program |
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Career Avenues |
Analyst, Research, KPO, Banking, Brokerage Firms, Mutual Fund Houses, Private Banking, Wealth Management firms, Financial Planning Outfits, Insurance Companies, Corporate Training, Educational Institutions, Independent Financial Advisory |
Banking, Mutual Fund Houses, Financial Planning Outfits, Insurance Companies, Corporate Training, Educational Institutions, Independent Financial Advisory |
Analyst, Research, KPO, Banking, Brokerage Firms, Mutual Fund Houses, Private Banking, Wealth Management firms, Insurance Companies, Corporate Training, Educational Institutions, Independent Financial Advisory |
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Examination |
In CWM certification there are 2 levels of examinations i.e. Level 1 and Level 2. The examinations are offline and are conducted on a Bi-monthly basis across India. |
In CFP certification there are five examinations that are insurance planning, investment planning, retirement planning, tax and estate planning and advanced financial planning. |
Exams offered at specific times: Level 1 in June / December, Levels II, and III in June only. |
“It’s not how much money you make, but how much money you save, how hard it works for you, and how many generations you keep it for.”