Financial Planner: Definition, Duties and Certifications
- Category: Finances Safe
- Date: 05-02-2024
Many Indonesians are already aware of financial literacy. This is proven in a national survey on financial literacy and inclusion conducted by the Financial Services Authority (OJK) and published on its website . The survey showed an increase in financial literacy which was initially only 21.84% in 2013 to 49.68% in 2022.
Financial planners work by helping clients achieve their financial goals. One of the financial goals that many people want to achieve is financial freedom . More about financial freedom can be read in this article: Financial Freedom Strategy: Steps Towards Financial Independence at a Young Age .
What is a Financial Planner ?
Before discussing further about the duties and certifications that a financial planner must have , let's first discuss what a financial planner is .
A financial planner is someone who is an expert in finance and has in-depth knowledge of various financial instruments and financial planning strategies. The main task of a financial planner is to provide consulting services to their clients to help manage and optimize their financial aspects. A financial planner does not just provide advice, but also designs a comprehensive financial plan according to the client's needs and goals.
Financial planners play a vital role, especially in the complex and changing world of finance. They help clients and their families navigate financial challenges, secure their financial future, and achieve their financial dreams. By understanding each client’s needs, financial planners provide tailored solutions and help clients achieve stability and sustainability in their financial lives.
Also read: Mistakes and Tips in Managing Your First Salary
Financial Planner Duties
Financial planners play an important role in guiding their clients towards their financial goals. Here are some of the tasks that a financial planner must perform :
1. Financial Needs Analysis
Financial planners begin their work by deeply understanding the client's financial needs. The process involves analyzing income and expenses and a good understanding of the short-term and long-term financial goals the client wants to achieve. This analysis forms the basis for all recommendations and financial plans that the financial planner will prepare .
2. Financial Planning
After understanding the client's financial needs and goals, the financial planner must design a comprehensive financial plan. This plan includes strategies for managing debt, budgeting, and allocating funds efficiently to achieve the client's financial goals. The financial plan must be flexible to accommodate changes in the client's financial situation.
3. Preparation of Investment Plan
Financial planners have the task of assisting clients in selecting the type of investment that suits their goals and risk profile. The steps involve in-depth analysis of various investment instruments such as stocks, bonds, mutual funds, and property. After selecting the right investment, the financial planner must prepare an investment plan that includes asset allocation and diversification strategies to optimize potential returns and manage risk.
4. Choosing the Right Financial Product
Financial planners also have the responsibility to guide their clients in choosing the right financial products. They help clients understand the various types of insurance, mutual funds, and other investment instruments. Financial planners must provide complete explanations and guide clients in choosing products that meet their financial needs and goals.
5. Monitoring and Evaluation
A financial planner’s job doesn’t end after planning and investing. They must regularly monitor and evaluate the performance of their clients’ financial plans and investments. In this role, financial planners analyze investment performance, review financial goals, and adjust plans if there are changes in the client’s situation or market conditions. By conducting regular monitoring and evaluation, financial planners can ensure that clients remain on track to achieving their financial goals.
Read also: Financial Security: Steps Towards Financial Well-Being
Financial Planner Type
According to Nerdwallet, a financial company in America, there are three types of financial planners that you can choose according to your needs. The types of financial planners are as follows.
1. Robo-advisors
If you want to make a simple financial plan, you can use a robo-advisor . A robo-advisor is a financial planner that is managed automatically using a computer algorithm. The plan will be adjusted to the financial goals you enter. Generally, the fees required for a robo-advisor are lower than other types of financial planners.
2. In-person financial planner
The next type of financial planner is in-person financial planners . You can choose this type of financial planner if you need more complex financial planning or for a longer period of time. This is because In-person financial planners can provide planning that is more in line with the actual situation.
3. Online financial planning services
Online financial planning services are a combination of robot and human financial planners. You will receive financial planning created by a computer algorithm. However, you can also consult with a financial planner via phone, email, or video call.
Financial Planner Certifications You Must Have
To become a financial planner , of course there is a certification that must be owned. Financial planner certification is issued by a financial certification institution in Indonesia.
Required Financial Certifications
A financial planner must obtain certification such as Certified Financial Planner (CFP) or Registered Financial Planner (RFP) to be officially recognized as a financial expert. This certification indicates that the financial planner has passed a series of exams and has a deep understanding of various aspects of finance, investments, tax planning, and business ethics.
Benefits of Having Certification
Having a financial planner certification provides many benefits. First, certification shows that a professional financial planner has met high standards in the field of finance and investment. Clients tend to have more trust in financial planners who have official certification because they know they are dealing with an expert.
Second, certification enhances a financial planner’s reputation in the industry. The credibility that comes with certification can help build long-term relationships with clients and open doors to new business opportunities.
Leading Financial Certification Institution
In Indonesia, there are several leading financial certification institutions that provide certification to financial planners . One of them is the Financial Planning Standards Board Indonesia (FPSB Indonesia), which is an institution that issues CFP certification in Indonesia. In addition, the Indonesian Financial Planners Association (IAPI) is also an institution that provides RFP certification to professionals in the field of financial planning.
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Benefits of Using Financial Planner Services
Using the services of a financial planner can provide several benefits to clients. Here are some of the benefits of using the services of a financial planner :
1. Have a clear and measurable financial plan
With the help of a financial planner , clients can develop a detailed and measurable financial plan. This plan includes financial planning strategies, fund allocations, and budgeting that are in line with the client's financial goals. A structured plan helps clients to have a clear vision of how to achieve their financial goals.
2. Able to Manage Financial Risks Better
Financial planners have in-depth knowledge of financial risks, both in investment and insurance. With their guidance, clients can manage investment risks wisely and understand the potential profits and losses of each investment decision. They also help clients choose the right type of insurance to protect themselves and their families from unexpected financial risks.
3. Have a more optimal investment
Financial planners help clients choose investments that suit their risk profile and financial goals. With in-depth knowledge of the money market, they can design a diversified and balanced investment portfolio. This helps clients optimize the potential returns of their investments while reducing risk as much as possible.
4. Have the Right Insurance Coverage
Financial planners guide clients in choosing insurance products that suit their needs. By understanding the client's financial condition in depth, financial planners can recommend the type of insurance that provides optimal protection, be it life insurance, health insurance, or property insurance. Thus, clients get adequate protection without paying excessive premiums.
Financial planners plan finances based on a financial pyramid that suits the client's financial condition. What is a financial pyramid? You can find complete information in this article: Financial Planning Pyramid for Financial Management .
Also read: Simplify Your Finances with This Financial Planning Pyramid!
5. Controlling Consumerism
Using the services of a financial planner will help you achieve your financial goals, so it can help you postpone the desire to spend money unnecessarily or on less important things.
6. Knowing How to Respond to Market Conditions
As explained earlier, with the help of a financial planner, you can gain an understanding of the current market conditions and economic situation. For example, you can find out when is the right time to make an investment.
In the world of finance and investment, financial planners are needed to help clients achieve their financial goals. In order to work well, a financial planner must have a certification issued by a leading financial certification institution. They carry out several tasks, such as financial needs analysis, financial planning, preparation of investment plans, selection of the right financial products, and monitoring and evaluation. Using the services of a financial planner can provide several benefits for clients, such as a clear and measurable financial plan, better management of financial risks, having optimal investments, and having the right insurance protection.
In choosing insurance products, marketers or financial planners at Prudential are also ready to help you. Insurance is an important financial instrument because it provides financial protection benefits. We are ready to help you choose insurance products that suit your and your family's needs, including Health Insurance . Contact us to get complete information about Insurance products at Prudential !