Gap In Financial Advice Being Filled By Influencers Who Have No Training Or Experience, Says Dante De Gori

There are a couple of things that we can do. One is, of course, training individuals professionally, as the opportunity for employment is huge. From what I know, there are more than 80,000 jobs currently for a CFP certificate holder. There’s a mismatch in demand and supply. So, the question is how quickly can people providing financial advice obtain their certification? A part of why I am here (in India) is to try and amplify that awareness and to encourage people to obtain the certification.

The second part, of course, is that people may not want to go to a professional, but still want advice or guidance and support. Here, media organisations like yours, social media and volunteers can provide support. It is impossible to have a CFP professional for everybody, and we are not advocating that. But we need to ensure that we can obtain a greater number of CFP professionals. At the same time, CFP professionals provide education through their own publications, newsletters and social media. So (one has to think) about utilising professionals to speak to a broader audience. At the moment, the gap is being filled by social media influencers who have no training, qualifications or experience.

Every country is different in terms of the regulatory landscape, and there are different stages of maturity of the financial services marketplace and its growth. Regulators are there to protect investors and consumers in respect to their engagement with financial service providers. Many of them play a role in consumer information dissemination because it’s a trusted source.

Where I have seen it work well in other territories is when there is a partnership between regulators and industry bodies, such as FPSB. For instance, in many territories, CFP professionals and the broader financial planning community offer pro bono services to conduct education (dissemination) forums or provide free financial advice to reach a broader audience.

Then there are global campaigns. For instance, the International Organisation of Security Commissions, which Sebi is a member of, hosts the World Investor Week (a global campaign) annually to connect regulators and industry participants at an international level.

In many countries, professionals volunteer to engage with investors and the public about personal finance, and support them in terms of financial information and the role and value of financial planning. That is done in partnership with regulators, the international regulatory body, and the industry bodies.

I think all regulators do. A part of their role has to be about ensuring consumer trust in the financial services marketplace. And part of that is educating people about who they should be seeking or sourcing their financial information from.

For example, they should be actively informing people that you shouldn’t be accepting advice from someone on social media. You should be validating that information or seeking the services of a professional before making decisions. Financial information is everywhere, but what are some of the trusted sources that consumers can rely upon.

Regulators around the world actively get involved in directing the public towards trusted sources. And this is something that Sebi and other regulators absolutely can and should be doing.

The US is the birthplace of financial planning and the CFP certification. So, they have had 50-plus years to cultivate and eductae the American marketplace. There is a very strong and mature financial services market. Consumers are a lot more aware about financial planning. For example, compared to India’s over 3,000 CFP professionals, US has over 100,000. And that’s just CFP professionals; the marketplace of financial advice professionals is much bigger than that. So, there is more choice and options available for the American public in that respect. That has made a difference there, but it has built up over a long period of time.

The Indian market will grow, and at a fast rate; it’s just going to take time. You have to continue to talk about financial services, financial planning, personal finance, so that it ceases to be a taboo topic and becomes normalised in the community. I suppose that still needs to happen in a market like India.

Any new professional will struggle for a while. They have got to build up their own reputation and experience. Some will partner with experienced financial planners or work with well-established businesses before going out on their own. Then there are institutions like banks, where many can obtain a foothold in terms of not only building experience, but also acquiring clientele. (They may also get clarity on) what type of advice areas they want to work in.

Also, the young generation have what the experienced individuals don’t have—connection to technology and the social media. Many might already have a presence on social media. One of the things to consider is how can we convert qualified professional individuals like CFP professionals into social media influencers. Why does it have to be the domain of the unqualified? But then there’s a sense of stigma and uncertainty because people are not used to communicating on social media about professional matters like financial planning.

We are always open to look at different ways in which we can better skill and support the training efforts. Obviously, the role of social media in respect to marketing, communication and connection is really important. But I think there’s a limitation to social media as you are not acting on a one-on-one basis. So, the training is not about how do you deliver personal financial advice on social media, but how to utilise social media as an additional channel to share financial education and information from a qualified professional.

But that can’t be the only channel. Working with the media, local communities and the industry to provide education support are other ways in which CFPs should be looking to engage with the public.

India is in a fantastic position because it has a young population, and that will no doubt be a contributor to India becoming one of the major powerhouses economically around the world. And that’s going to create opportunity for both professionals and the public.

To answer your question, the point that is raised in every conference is how to engage with the young generation. That’s because how they consume advice is going to be very different from, say, (how) a 60-year-old (consumes advice). I have looked through data and it’s very interesting that they (young generation) are more comfortable in engaging with a professional, but digitally. Many studies (show) that they want a personalised service. So, no matter what technology comes in or what platforms are used to engage, people want a personalised service. Obviously, the emergence of artificial intelligence (AI) will support engagement and access to information. So, the consumption of advice is changing.

Many of the education programmes that CFP professionals undertake have elements of: How do you engage with new clients? How do you engage with the younger generation? How is technology going to help you do that?

Then, there are many practitioners who only specialise in advice for pre-retirees or retirees. So, depending on your practice and business, you need to undertake the training that best suits how you want to engage with your clientele.

At the international organisational security commissions level, crypto is a big topic. Irrespective of governments, it’s an unregulated product and there’s a lot unknown about what it is and how it’s valued. For example, in South Africa, the government has decided to make crypto assets a financial product. So it’s regulated. So, in South Africa, you need to obtain a licence to give (advice on) it. In most other countries, it’s not (regulated).

I can tell you that irrespective of the government, every CFP professional I’ve spoken to has a general disliking to crypto assets. So that’s what my view is, too. But whether it’s the US or India or Europe, many CFPs want to learn and understand crypto assets, even though many of them would probably prefer not to recommend crypto. In the US, there’s a mix, but many of them are sceptical about what the long-term future’s going to be.

But it’s an open market and consumers drive a lot of the direction in terms of what professionals have to respond to. I remember a survey 2-3 years ago where the number one question from clients was (about investing in) crypto assets. So, they (CFP professionals) are caught in between: on the one hand, regulators are not permitting them to make recommendations on them, on the other, consumers are asking about it.

Where we’ve landed is that it’s up to individuals and their comfort. Also, one of the principles of being a CFP is that you would advise on areas in which you are competent. There are opportunities to train yourself in the areas of crypto assets, but they’re (CFPs) doing that to be able to have a conversation. With any alternative assets, generally speaking, or trends like the fear of missing out, most professionals will engage with their clients, at least talk about them and explain: If you are going to do this, I can’t recommend which crypto you’re going to enter into, but if you are still going to do it, restrict your exposure to 5 per cent of your portfolio.

But this has to be applied not just to crypto assets, but many other alternate financial instruments as well. For instance, artwork. Again, financial planners aren’t technically trained on artwork, but if you look at diversification and portfolio construction, a financial planner can guide, if there’s passion and interest in such an instrument.

Regulators around the world actively get involved in directing the public towards trusted sources of information. And this is something that Sebi and other regulators absolutely can and should be doing