All Indians need to plan their financial future: Noel Maye

Noel Maye, chief executive of Financial Planning Standards Board (FPSB), USA, says the Indian attitude of "I am OK. My children will look after me" is wrong.

Why is financial planning so relevant in the Indian context?

The family structure is traditional and the general attitude is "I will be. My children will look after me".

However, as employment becomes less of a permanent thing, as employers pull back guaranteed pensions, as governments tell their population they are not going to be able to give guaranteed returns on their investment vehicles, the responsibility gets pushed down to individuals to manage their finances.

It's important for the Indian consumer to understand what they know and what they don't know and then, commit to being a part of planning their financial future.

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Does FPSB play a part in pricing of the service provided in the segment?

Fee-based or commission-based pricing is an ongoing discussion, as the focus of financial planning has been on selling. We are trying to encourage a shift in mentality, from transaction to relationship. To implement a financial plan, you need products. So, for us, it's not an either-or choice.

However, the consumer must choose a planner to work with after understanding if there is an appropriate level of disclosures, why are recommendations being made and conflicts being managed. Globally, we see a clear distinction between advice and selling.

Within large firm structures, one sees the two functions being kept separate. For us, the financial planning space is still evolving. We don't know yet what is an ideal model for operation. Hence, we don't take a position with regard to any compensation structure.

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In India, individual financial planners are preferred. Is that the case globally, too?

In all countries we are present in, there is either a skew towards individual or institution or the market is balanced between both. For instance, if you look at evolution of financial planning services in the US, it started with individuals.

A group of individuals working with large organisations felt they must work independently to practise financial planning. However, almost two decades later, most financial planners work in large organisations.

Similarly, if I look at some other countries like China, 95 per cent of our professionals work in organisations. If they need reliable advice, they look at firms rather than individuals.

India is different, as it's an entrepreneurial country and, therefore, probably natural for consumers to be comfortable with individuals. But there is certainly room for both. I don't think it makes much difference as long as good service is provided.

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How does FPSB US develop the curriculum in tandem with new markets?

We develop global standards, framework and content for the certified financial planner programme. The proportion of localised content varies across countries. Let's take estate planning: It is not as complicated in India as it is in the US.

So, while it will be included in the Indian curriculum, it will be a far smaller module than in the US. The areas covered are consistent across the board, but the magnitude varies.