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Korea’s Financial Planners Anticipate and Drive Growth for the Next Decade

By Daehong Kwon, CFP
Nearly a decade has passed since Korea saw its first CFP professional when the FIFA World Cup Korea-Japan 2002 took place. Currently, CFP professionals are playing a key part in the operations of most financial institutes such as banks, security firms, insurance companies, and recently, a growing number of CFP professionals are carrying on their own business independently.

Financial planners have made many contributions to the advancement of the financial industry over the last decade. Meanwhile, our anticipation has not been fully met. We all wonder, with both anticipation and apprehension, about what direction the financial planning profession in Korea will take in the next 10 years and how financial planners can differentiate themselves from other financial experts in the market and build trust with their clients. It may be necessary to shed light on the past and present conditions of the Korean market for financial planners on which basis we can envision the future.

Financial Planning: A Pivotal Role

In the first place, we start by examining the positive side. Financial planning has played a pivotal role in helping Koreans, who were oriented toward short-term profits and have an unshakable faith in real estate, to pursue diversified investment strategies rooted in the financial planning for far-sighted life planning and long-term investment. Financial planners have leveraged media appearances, media promotion, books, on-site consultation for clients, various lectures, and voluntary service activities to connect with clients and dramatically raise public awareness toward the need and importance of financial planning. Moreover, clients were freshly impressed with their strong ethical obligation, systematic six-step financial planning process that they drive forward, and the professional manner in which they carry out their specialized functions that encompass a wide range of fields, such as retirement, real estate, tax affairs, etc, as well as insurance or investment, and specifically, their attention and advice on not only money matters but also with the clients’ lives.

Misconceptions Remain

Meanwhile, there are still things to be desired. Some financial planners have caused clients to have the misconception that financial planning is merely a new marketing tool for selling various insurance or financial commodities. Another hurdle to overcome is the powerlessness; as the perceived lack of confidence that one cannot make money from the financial planning profession (statistics show that financial planners tend to see a temporary decline in income compared to someone who is a full-time insurance salesperson or a stock broker). However, financial planners in developed countries may have encountered similar circumstances, and I stand firm in my belief that things will improve gradually if the market and financial planning becomes more mature.

The Korean market for financial planning showed unprecedented strong performance nationwide in five to six years after the financial planning profession was first launched. Financial planners positioned themselves as experts and had a rosy future awaiting them. However, the consequences from the subprime mortgage crisis during 2008 dealt a blow to financial planners both psychologically and financially, and some financial planners left the profession. By contrast, financial planners who used this crisis as a springboard to build strong relationships and trust with clients could have cemented their faith in financial planning. Crises will come regularly in the period ahead. The financial planning profession will be flourishing in earnest in Korea if financial planning comes to the mind of clients first when they seek someone who they can rely on and help them weather the difficulties.

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