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Financial Planning Regulations without Financial Planners Are Meaningless

Junesoo Chang, CFPBy Junesoo Chang, CFP

Korean consumers’ awareness of financial planning still remains relatively low. This calls for creating an environment in which the value of financial planning gets to be known more widely, so that more people can materialize their life dreams through financial planning. For this to happen, many competent financial planners have to be available. Also, the importance of regulation emerges, where financial planners can practice actively and clients can feel confident.

Increase the Spread of Financial Planning

Since the CFP certification was first brought to Korea ten years ago, many able CFP professionals have entered the community. They have, of course, maintained the qualifications that meet the international standards of the profession, practicing with confidence in the value of financial planning. On the other hand, studies have yet to be conducted in regard to regulations that can lead to the spread of financial planning.

Of course, most regulations are playing the role of guiding the financial planning practice in a desirable direction. For example, by limiting the kinds of financial products that can be handled by financial planners based on their risks, they are ensuring the quality of service to clients. Nonetheless, clear directions are still missing, with inconsistencies among financial sectors remaining.

Financial Planners are Forced to Rely on Sales

Because private bankers in large financial institutions in Korea do not ask for fees, independent financial planners are hard-pressed to receive fees from clients. For this reason, most independent financial planners rely on the fees from the sales of insurance or securities products for their major income source. Another example is with securities products: Whereas insurance products can be sold directly by financial planners, securities products can only be sold by securities firms to which clients have to be taken. Thus, as for the securities products, an independent financial planner’s role is reduced to a broker of a client. This kind of regulation unduly limits the client services of able independent financial planners, causing clients’ inconvenience and as a result, dampening the financial planners’ practices.

Corporate vs. Independent Planners

Currently, debates are taking place in Korea to make regulation that concerns receiving fees for advice given on financial products. It’s been reported that a draft is in the making that states: only those who belong to an approved corporation, with a regulation size and system, can receive the fees. A final outcome has yet to be discovered, however, I personally don’t think that this kind of regulation would favor the practice of independent financial planners. The value of the counseling should be evaluated by the client, and it is the client who ought to determine the level of the fees. The organization the counseling financial planner belongs to is not the factor that should determine the fees.


Those in the financial authority may not fully understand the value of financial planning, or may underestimate the competence of able independent financial planners. Therefore, in order to have the regulation on financial planners’ practices crafted in the right direction, financial planners’ views and opinions have to be fully integrated in the process. This calls for financial planners to maintain constant communication channels with organizations and the financial authority to express their views, while keeping the organizations’ attention to this issue.

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