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Introduction

In recent years, the individual's daily life environment in Japan has been changing as a result of citizens seeking better lives, the rapid growth in the senior population, the deregulation of financial services, and reformation of the Japanese pension system. In order to realize a sound and comfortable future, people are seeking comprehensive financial planning for their life plans.
Under such an environment, JAFP members who work for the top five financial industries, such as life insurance companies, banks, and securities firms, exceeded 50% of our membership. Also, those institutions not only started to foster financial planners but also to hire financial planning professionals. Certified Members who work for the construction and the real estate industry have been increasing as well.On the other hand, Certified Members who are independent or working for independent financial planning firms are only approximately 0.4% of the total, and 2% of all CFP® certificants, but they have been developing their financial planning business successfully putting "clients' interest first" and by being "objective". While the majority of financial planners in the Japanese financial planning industry are providing services utilizing their financial planning knowledge and skills at financial institutions, at the same time, the independent financial planner market has been increasing.

Financial Planner Practice Survey

The "Financial Planner Practice Survey" that JAFP conducted in May 2006, targeting our Certified Members, had 10,791 respondents. Among those respondents, 41.3% were practicing financial planning either at financial institutions or as independent practitioners. Independent planners who responded as having earned sales revenue from financial planning services were 6%. The survey also showed that 13.9% of those independent planners had more than 10 million yen sales revenue. Notably, 41.1% of independent financial planners, who were in business for more than 9 years, had more than 10 million yen sales revenue. This result is similar to the 2005 survey in which 35.3% of independent financial planners who had been in business for over 9 years, earned more than 10 million yen per year (9,977 total respondents). The survey showed that the annual revenue of independent planners, in fees and commissions, increased along with experience. In other words, it could be said that financial planning is a lucrative profession if a planner has the high level of knowledge and experience necessary to provide clients with satisfactory services.
The Financial Planner Practice Survey indicates the average client assets of planners' revenue from financial planning services - and having individual clients with average individual assets between 10 - 50 million yen - was highest at 38.3%. The survey also shows that 33.5% of clients were between 55 and 64 years old, the highest percentage, and it reflects the baby boomer generation's concerns. Clients age is higher than last years survey, but clients between 35 and 54 years old remains the same, at near half (a total of 47%). Due to an unsettled future caused by the reform of the savings insurance and the pension system; demographic changes (increase in number of seniors and a decreased birthrate); elimination of lifetime employment; and an increase in the number of unmarried adults, the demand for financial planning/planners from the working generation has been high.
Although Japanese are known to be risk averse, during this very low interest era, the interest in and purchases of principal non-guaranteed financial products has been increasing, and asset management has been shifting from savings to investment types. According to the survey, 37.9% of assets held by individual clients are "residential property (domestic)", followed by "savings (domestic)", and "investment in real estate (domestic)". However, the percentage for investment in financial products such as equities, bonds, mutual funds and J-REIT has increased drastically over last year (equities and bond investments increased from 7.2% to 13.0%, and mutual funds and J-REIT investments increased from 2.7% to 10.2%). We foresee that some risked based investments, including off-shore investments, will further increase.

Trend in Financial Planners at Financial Institutions

The number of financial planners working for financial institutions is predicted to further increase. Many financial institutions such as banks, life and non-life insurance companies and securities companies already have been encouraging employees to obtain financial planning designations in order to utilize those designations in sales and advice activities, and they have started to support in-house training or subsidizing tuitions for financial planning education. Further, some companies are implementing bonus systems to encourage the obtainment of designations, or making the attainment of such designations a condition of promotions and salary increases. Financial planners working for financial institutions obtain knowledge at their workplace. However, further education concerning real estate, estate planning, and taxation, greatly increases their ability to meet their clients' needs with credibility. Planners at institutions typically utilize their knowledge and skills to distribute their company's financial products, and rarely receive fees from clients for their financial planning services.

Trend in Independent Financial Planners

On the other hand, the independent planners' role is to maintain a close relationship with their clients, and from an independent position, create life plans after understanding their clients' needs and expectations. And, they assist in managing clients' assets in an objective and comprehensive manner. Independent planners also establish alliances with other professionals such as attorneys and tax accountants to improve the financial planning services they provide to their clients.
Aside from consultation services, many independent planners write articles for financial related magazines. Some articles are written free of charge in order to facilitate an increase in the consumers' financial literacy. Such articles also serve as a public relations tool to publicize the planner writing the article and ultimately in the development of clients for financial planning consultation. Also, Japan has a huge market for financial planning education and some independent planners write textbooks for financial planning certification programs and teach those classes.

Trend in Financial Planning Related Businesses

Along with the growth of the financial planning industry, related business has been expanding as well. Related business includes providing back office services to individual planners. Examples are software as calculation and simulation tools for plan-development. Such business will continue to expand along with the growth of financial planning industry.

The Future of the Financial Planning Industry

Twenty years have passed since the establishment of JAFP, and the demand for financial planning designations has been increasing at financial institutions where many of our members work, and in other industries. Certified membership of JAFP exceeds 140,000 today, and the number of Certified Members who has intent to become independent is increasing as well.
As a result of changes in the social and economic environments, the public's interest in financial planning/planners will continuously increase. Under such circumstances, truly competent and highly skilled financial planning professionals who meet the requirements of the "four Es"and 6-step process will experience higher demand. The Japanese financial planning industry will continue to grow, along with those financial planning professionals who are active in the market place.