Nearly a decade has passed since Korea saw its first CFP professional; it was 2002, the same year the FIFA World Cup took place, with Korea playing Japan. Currently, CFP professionals are playing a key part in the operations of most financial institutes, such as banks, security firms, and insurance companies. Recently, a growing number of CFP professionals are carrying on their own businesses, 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. We also contemplate how we can differentiate ourselves from other financial experts in the market and build trust with our clients. It may be necessary to shed light on the past and present conditions of the Korean market for financial planners, before we can envision the future.
The Positive Side of the Financial Planning Profession
To begin with, let’s take a look at positive parts of the profession. Financial planning has played a pivotal role in helping Koreans who had visions of short-term profits and an unshakable faith in real estate, to pursue diversified investment strategies, rooted in financial planning, for long-term life planning and investment.
Financial planners have leveraged media appearances, media promotion, books, on-site consultations with clients, various lectures, and voluntary service activities to connect with clients and dramatically raise public awareness towards the need and importance of financial planning.
Moreover, clients were freshly impressed with financial planners’ strong ethical obligation, systematic six-step financial planning process, and the professional manner in which they carry out their specialized functions. Clients especially appreciated the financial planners vast wealth of knowledge that encompasses many fields such as retirement, real estate, tax affairs, insurance and investments. Most importantly, clients liked the attention and advice given on not only money matters, but also on their lives.
Areas that Need Improvement in the Financial Planning Profession
Meanwhile, there are still things to be desired. Some financial planners caused clients to have a misconceived perception that financial planning is merely a new marketing tool for selling various insurance or financial commodities. Another hurdle to overcome is the feeling of powerlessness that comes from the perception that one cannot make a living from financial planning. 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. Even though financial planners in developed countries may have encountered similar circumstances, I stand firm in my belief that things will improve, gradually, as the market and financial planning profession become more mature.
The Mortgage Crisis and it’s Effects on the Financial Planning Profession
The Korean market for financial planning has shown a successful and unprecedented performance, in the 5 to 6 years following the launch of the profession. Financial planners have positioned themselves as experts, and now have a rosy future awaiting them. The subprime mortgage crisis during 2008 dealt a blow to financial planners, both psychologically and financially, and some financial planners even left the industry.
On the contrary, some financial planners used this crisis as a springboard to build stronger trust in their client-relationships, cementing their faith in financial planning. Crises will come regularly in the period ahead. If only we can find a way for financial planning to be the initial thought for someone who is seeking financial help, then the financial planning profession will flourish in Korea.