Private Practice Financial Advisor
Money is something that undoubtedly worries each of us. The topic of “personal funds” traditionally occupies the honorable top places in the ratings of the most important aspects of life and immediately follows “family relations”, “housing issues” and “personal security”.
To rationally manage personal finances, correctly shaping the strategy of accumulating large purchases, managing loans and tax deductions, etc. For more than 100 years, financial advisers have been helping residents of developed countries. In the United States, Europe, Australia, virtually no one will turn to a bank or an insurance company without first meeting with personal financial advisors. In Russia, the first advisers appeared only in 2005, when the results of a study conducted by Romir monitoring confirmed the need of Russians for the services of financial advisors in more than 34% of the adult population.
“Addressing consultants is a fairly common practice for those who have the notion of“ mine ”: my money, my personal physician, lawyer, etc.,” says Dmitry L., financial advisor to the head of a major Russian company. For wealthy citizens, this is primarily a status symbol, although an important role is played by more objective reasons - the lack of time and the desire to keep track of all the affairs themselves, and at the same time a pronounced need to use constantly incoming funds in some way. ”Natalia Dovnar“ Finance. ” , No. 4 (141)
Since that time, the industry of providing paid consulting services to address personal financial issues has been actively developed, which is facilitated by the development of the financial market, the increasing complexity and increase in the number of financial instruments. This type of professional activity makes it popular: flexible working hours, low start-up capital and expenses for running your own business, as well as high material and emotional returns from work. Therefore, it is not unreasonable that the idea of organizing your own consulting practice in the field of personal finance is today justly considered the best idea for small business!
The activities of a financial advisor , traditionally included in the top ten most prestigious and highly paid in the world (rating of magazines CNN Money and Salary.com). Financial advisors provide clients with the following services: design an individual financial plan and select the best financial instruments to achieve the client’s financial goals; formation of an individual investment strategy and selection of optimal instruments; selection and execution of insurance programs protecting the life and property of the client; development of a strategy to ensure the retirement period, assistance in the return of tax deductions, selection and support of the formulation of the optimal lending program (consumer, auto, mortgage). In the proposals of financial advisors, one can find such delights as: international instruments of preserving and increasing capital, savings programs for the education of children abroad, various solutions for purchasing real estate abroad, incl. on credit.
The most popular services in 2009 were: advising on savings (56% of the total number of calls to advisers); assistance with tax deductions (27%) and pension planning (17%).
The organizational practice of a financial adviser is most often framed in the form of an LLC (40%) and an IP (30%). Counselors are actively using the opportunities of small business support programs when organizing their own practice - they receive grants and benefits, for example, in Moscow the amount of a non-repayable subsidy for organizing a business was 350,000 rubles. The conditions and amounts of financial support for budding financial advisors in different cities are different, but this socially useful activity is supported without much difficulty.
Alexander Kondratenko, Khabarovsk: “I received 2 types of subsidies: from the Khabarovsk Employment Center in the amount of 58,800 r. (federal subsidy) and from the Administration of Khabarovsk in the amount of 100 000 p. (local subsidy). The fund also reimburses the costs of organizing a legal entity in the form of an IP or LLC, provides free accounting and legal advice. The administration encourages priority activities for the region, such as consumer services (for example, NSF - financial management). It's nice that the state is to some extent ready to really help start-up business by giving out grants. ”
Most advisers are publicly active: many have their own Internet portals, blog pages, they are actively invited to cooperate with the media, they actively participate in exhibitions and conferences. But there are those who prefer to work only with their client base. According to statistics, the profession of a financial adviser is most successfully mastered and combined with the main activity: bank customer service managers, insurance agents, retirement consultants, realtors, accountants and teachers.
How they work. “The financial adviser must correctly understand what the client wants. To do this, you must be a good psychologist, because people themselves often do not know what they want. The consultant helps to formulate the investment objectives of the client and makes a financial plan for life. And in order to select an investment portfolio, he needs to understand what expenses and when an investor is coming. Then, at the right moment, the client will have money to pay for the child’s education, for a quiet retirement. Then the consultant must determine exactly how the client relates to the risk. The words of the client that he is ready to lose a little on investments may not correspond to reality - he will get nervous or even liquidate his portfolio if he declines for the year. Upset client is a very unpleasant partner for a consultant. Russian clients will share the negative information about their advisor more eagerly and the negative effect of this is very strong, since the consultant’s reputation suffers. ”Elena Berezanskaya, Forbes 08.2005. The average working day of an advisor is 5-6 hours a day, which is ensured by automating many processes - from leaving the client’s financial plan (automatically taking into account all changes in legislation and instruments on the market) to sharing customer documentation with companies that provide financial instruments.
How much do advisors earn today? 60 000 - 85 000 rub. per month in major cities and 25 000 - 45 000 rubles. in medium-sized cities, which is ensured both by paying for services by clients of independent expertise and adviser, and by remuneration from leading financial service providers, for advising a client and for preparing a package of necessary documents. It should be remembered that the relationship between the adviser and the client is based on a long-term basis, and once having found his adviser, the client annually realizes his personal financial goals with his help. Customer requests to the adviser are regular and range from 2-5 times a year on various financial issues. On average, one client purchases services annually for 10–20,000 rubles, incl. including commission from the services purchased by the client on the recommendation of an advisor. This level of remuneration is provided at approximately 6-8 hours of work per year for serving the interests of one client.
The cost of financial advisers services is on average:
• 5 000 - 40 000 rub. - drawing up a personal financial plan,
• 400 - 20 000 rub. for advising and drafting insurance protection tools
• 400 - 900 rubles. - consultations and execution of an application for the transfer of the funded part of the pension to the NPF or
• management company
• 1 500 - 2 500 rub. - assistance in the preparation of documents for tax deduction,
• 3 000 - 7 000 rub. - formation of an individual investment strategy and selection of tools.
• 1 000 - 2 500 rub. - one-time consultations
The cost of organizing the practice of a financial adviser, depending on the format of the organization, can range from 70,000 to 160,000 rubles, which includes the costs of training, company registration and legal accounting support of the process, as well as organizing events for forming the initial client base.
Financial advisors are actively involved in activities aimed at improving the financial literacy of the population, supported by the Government of the Russian Federation, the Ministry of Finance of the Russian Federation, financial institutions and administrations of various cities. Counselors hold open seminars, support online consultation services, participate in the preparation and distribution of educational materials, and organize events for students and schoolchildren. In some cities, for example, Novosibirsk, Saratov, Zhukovsky, the support of the city administration has already found the idea of organizing Financial Literacy Centers. Within the Center, financial advisers implement activities aimed at spreading a culture of financial literacy among various categories of the population.
It should be noted that today in Russia an infrastructure has been fully formed that fully satisfies the full range of professional needs of a financial adviser, from training to escort on the basis of business organization sites. The community of advisers defined the standards for providing consulting services and methods of working with various financial instruments, identified the most efficient ways to form and manage relationships with their own client base. Modern software solutions have been created, business advisory programs for financial advisers are actively working, the association of advisers “The Alumni Club of the Institute of Physics and Industry” is open for communication, providing advisers with the opportunity to exchange experience between their colleagues, including and foreign experts practicing IFA with many years of successful experience. In essence, the basic condition for the development of a profession is the desire to provide advisory services to the population in solving personal financial issues and the ability to communicate with clients.
Benefits and Challenges of the Business Advisor
· Ease of organization. In order to start earning money as an Advisor, you need to: be able to correctly determine the needs of the client, select one or another financial instrument and arrange it. Options to start a great many. Many of our graduates begin to advise clients while continuing to work in the main place (for example, under the agency cooperation program with current Advisors) or, having found a business partner among graduates, create joint projects, some immediately embark on independent navigation. The areas of specialization are varied, as well as the format of the business, and depend on your wishes, some of the graduates stop at privately advising friends and acquaintances on investment issues, and someone creates a wide branch network of universal Advisors.
· Low start-up costs. To start activities, you need: training under the program "Independent Financial Advisor" and a computer with Internet access, the average cost is $ 800. An important and obligatory item of expenditure is to attract customers: on average, attracting 1 client costs $ 32-50 depending on the range of Advisor services and the price offer. According to the experience of the Advisors, the most actively work to attract customers: some types of Internet activity and seminars, exhibitions, the first free consultations, PR. The costs of organizing the practice (company registration, creating your own website, renting and office equipment, accounting and legal support) depend on your wishes, and the range of these expenses can be as low as $ 300 per month. and to infinity.
· Stable decent income , with high growth potential. Today, clients are willing to pay between $ 45-350 for the Advisor service (at the prices of Advisors providing services in Moscow), on average, this provides about $ 2,000 per month for 4-6 hours a day. Once you start working with a client, you provide yourself with a stream of subsequent calls, because after a successful first communication, the client is ready to purchase 2-3 services each year. Difficulties:
· Winning customer confidence. “The subtleties of communication. In contrast to corporate, private counseling is less regulated, permanent attorneys in a certain sense of the word "belong to the family." “As people get out of the“ shadow state, ”they will have to trust someone,” Sergei Smirnov is sure, “but trust is not born immediately - the process of getting used to each other lasts from three to six months.” The personal factor, mutual understanding and loyalty play a very significant role here. “In private counseling, the concepts of“ awkward ”,“ inconvenient ”,“ inappropriate ”appear. It is necessary to catch the mood, not to deal with the most wonderful idea at the wrong moment, - says Dmitry L. - Under no circumstances you can show your anger, even “cheering”, - this will be perceived as “disrespect”, and disrespect does not end the best way. " FINANCIAL ADVICE: LARGE AND SMALL Nataliya Dovnar "Finance.", № 4 (141),
· Multitasking activities. Since in most cases the business of a financial adviser is small and does not provide for a state of highly specialized specialists, it is necessary to independently solve a large number of various tasks. Depending on the chosen business strategy, the adviser often comes to combine with the main activity the functions of a marketer, advertiser, PR specialist, site editor, accountant, lawyer, development director, etc.
· Continuous maintenance of the form. The work of the Advisor is the solution of non-standard tasks with standard market tools. Every day, clients come with their own completely unique financial situations and goals, for each specific case you need to create a unique design to achieve the tasks set by the client. Therefore, to maintain the required level of service, the Advisor needs to constantly develop, learn more about the market and its products, constantly keep abreast of the financial sphere, which of course takes time and iron self-discipline.
Prospects for the development of private financial consulting in Russia 2010-2012.
• Restoration of the market after the crisis, the emergence of questions from customers about the preservation of capital and its multiplication • Revitalization of the FSFM to attract private investors to the stock market
• Activization of the Central Bank and the ARB to restore and develop private lending
• Changes in tax legislation of 2010-2012.
• Changes in the pension legislation of 2010-2011.
• The emergence of new financial services • Increased media interest in personal finance
• Development of financial literacy programs of the Ministry of Finance, the World Bank, banks and other financial organizations, the Federal Financial Markets Service, the ARB, etc.
34% of the population in cities with a population of 500 thousand -1 million people on the question of who would you like to see as a mentor in the financial literacy program preferred independent financial advisers (according to a study by the National Agency for Financial Research, November 2009).
• Development of relations of financial institutions with financial advisors.
Already more than 50 leading financial institutions of the country are already actively cooperating with financial advisors. Within the framework of cooperation, advisers have access to special conditions for access to financial instruments, agency fees, a system of support measures for activities.
• Development of business support programs for financial advisors and modern specialized software solutions for advisors on the Russian market.
• 100,000 - 350,000 rubles. subsidies and concessions for the development of small businesses available in every city of Russia. The conditions and amounts of financial support for budding financial advisors in different cities are different, but this socially useful activity is supported without much difficulty.
Now it is already possible to find advisers in almost any large city in Russia: the most active graduates work in Moscow, Novosibirsk, Tyumen, Krasnoyarsk and Khabarovsk. Today, the Institute has about 1,300 graduates, but the concentration of financial advisers is still negligible (only 0.002% of Russian families have personal financial adviser services available, for comparison, more than 60% of European families are provided with such a service). As the demand for services continues to grow rapidly and the financial market provides significant support to the personal financial advisory industry, we can expect explosive dynamic development of the market in the next few years to reach a state-of-the-art financial advisors service for Russians.