What would happen if you land up to a gynecologist for a treatment of Angina Pain? I know this could be laughing statement for many but people in rural India still doing the same.
Very valid argument in favour of this action is both are Doctors and qualified in medicine practice so they can definitely handle the patient but the question is about their expertise. So is a case with money management or the financial health.
Investors often do self-diagnosis and self-medication when it comes to their financial health or they approach vendors (so called agent, distributors) to have prescription for the financial ailment. Is it not similar to approaching a chemist or druggist for health problem?
The role is different yet important of all the professionals in this whole financial or health management. Financial Planners writes a Financial Plan after analysing your financial health, Agents or Distributors provides you the products suggested by the planner, wealth manager or portfolio manager manages your money to increase the ROI, Chartered Accountants helps you to minimise your taxation legitimately with guidance to various tax laws and procedures.
All these and other similar looking professional designations are quite different in their nature of job and hence the title of this posts too. Thus, I am jotting a few of the closest ones and differentiating between them in following paragraphs for better understanding of our audience:
Insurance agents are individuals licensed by IRDA to sell life and health and/ or property and casualty insurance products. Many financial planners are also licensed to sell or give advice on insurance products. Other financial planners might identify insurance needs for a client, but turn them to a licensed insurance agent for recommendations about which existing insurance products best meet the client’s needs. Independent insurance brokers sell products for two or more insurance companies, Individual insurance agents represent only one.
Portfolio managers typically design a portfolio for clients (or work with a design developed by a financial planner) comprising individual securities, bonds, real estate or other financial assets and investments, and manage the portfolio on a discretionary basis, usually for a fee that is a small percentage of the value of the assets under management or sharing the profits after a hurdle rate.
Distributor is a company or individual that sells mutual funds units on behalf of the Asset management Company. A third-party distributor receives a portion of the loads (or sales fees) that the mutual funds charge unit holders or distributor charges fees for their services.
Chartered Accountants provide trustworthy information about financial records. This might involve them in financial reporting, taxation, auditing, forensic accounting, corporate finance, business recovery and insolvency, or accounting systems and processes. Generally, they play a strategic role by providing professional advice on taxation and legality.
Stock Broker is a regulated professional broker who buys and sells shares and other securities through stock exchanges or Agency Only Firms on behalf of investors. A broker may be employed by a brokerage firm.
Certified Financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes but is not limited to these major areas: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).
The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, he is guided by the financial planning process to create a financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's specific goals. The key defining aspect of what the financial planner does is that he considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client.