What is Financial Planning

Term “financial planning” recently and wondered what it means.

Personal financial planning is broadly defined as “a process of determining an individual’s financial goals, purposes in life and life’s priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals.” The individual’s goals are used as guideposts to map a course of action on ‘what needs to be done’ to reach those goals .It is the process of meeting your life goals through the scientific analysis of existing investment and proper management of your finances. Life goals can include buying a home, saving for your child’s education, marriage, Vacation, starting new business, planning for retirement etc.
Who needs financial planning? What is the best age to start financial planning?

While it is true that the younger you start the more beneficial the process will be, financial planning is worthwhile at any age. Although younger people may have more decisions to make regarding their financial lives, changing laws and circumstances can lead middle-aged people and seniors to have to adjust their financial plans as well. Changes in tax law, for example, may require many people to revisit certain investments or estate plans, and adequate disability planning becomes more important as people age. After retirement, efficiently manage investment to plan debt free hassle free peaceful life. Financial planning isn’t just for the wealthy. It’s for everyone, “In a world where people are more responsible than ever for their financial lives, it’s important that people understand the key things they need to do in each phase of their life.”

The Benefits of Financial Planning

Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

Financial planning process is a six step process

While process is described in steps, financial planning should be viewed as a seamless co-ordination of an integrated process of managing one’s financial resources & Consideration. The Financial Planning process “at a glimpse”

Step One  Determining the current financial solution and Client – Planner Relation

Developing a Your and Planner’s relationship by defining what to expect from Planner and What Planner can expect from you. by focusing on your current financial position by preparing list of assets & liabilities & expenses spent on various expenses.

Step Two – Gathering Information & Setting Financial Goals

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should garner all the necessary documents and help to reiterate goals precisely before giving you the advice you need.

Step Three -Analyze & Evaluate the Information

The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

Step four Evolve & Present Action Plan

Creativity in developing alternatives is also a crucial when making decisions.Mapping an action plan detailing strategies that are matching to achieve the client’s goals. Identifying optional methods to accomplish goals & getting the consent to institute action. Recommendation of Plans addressing your need, goals with provided information by you.

Step Five Execute the Action Plan

Encouraging & assisting clients to execute the action plan. Eg: Acquisition of necessary financial products, instruments, contacting brokers, lawyers ,everything that is necessary for plan to work.

Step Six Monitor and Review Plan

Monitoring and reviewing the plan in action. Implementing required changes & rework plan to suit the need. Eg: Continuing the same course of action, expanding the current, changing it or taking a new course of action as per client’s goals.
Financial Planning is a dynamic process which requires continuous monitoring and readjusting the plans as an when life events affect financial needs, this financial planning process provides a vehicle for adapting to those changes. Regularly reviewing this decision making process will help to prioritize adjustments that will bring the financial goals & activities in line with the current life situation efficiently.

Who are Financial Planner

The phrases “Financial Planning” or “Financial Planner” are sometimes used by individuals to promote the sale of financial products, or are confused with the sale of such products. Many Financial Planning practitioners may also be registered representatives who sell securities products, insurance agents who sell insurance products, or investment advisers who recommend certain financial products. As a result, the public is often confused about the distinction among Accountant, Insurance agent s, distributors of various financial products

CERTIFIED FINANCIAL PLANNERCM or CFPCM practitioners are individuals who have met the FPSB India’s Education, Examination and Experience requirements, are committed to high Standards of Ethical conduct and who complete the FPSB India’s biennial certification requirements to use the certification marks CFPCM, CERTIFIED FINANCIAL PLANNERCM (logo). A CFPCM Certificate holder is a financial professional authorized to use the CFPCM Certification marks that has identified himself or herself to the FPSB India as being actively engaged in providing Financial Planning services and are voluntarily submitted to the regulatory authority of the FPSB India.

Financial Planning Standards Board India is a Public – Private Enterprise and a Professional Standards Setting body that proactively guides the development and promotion of standards for Financial Planning professionals to benefit and protect the public in the country. FPSB India closely works with all the stakeholders’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. It is a Professional Membership & Certification organization-part of leading Global Confederation established by prominent financial service corporations with an objective to professionalize the concept of Financial Planning in India.


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