Financial Planning and Its need for the masses

Financial Planning is the most relevant and customer centric approach in financial advisory. It is the most practical way of matching the cash flows to meet an individual’s various life goals. Today in all the developed countries this is the most prevalent approach of investment advisory. In India also there are many dedicated institutions providing the courses on Financial Planning and Wealth Management on both full time and part time to thousands of students and professionals.

Financial planning is the process of assessing the financial goals of a client that arise at different intervals in his life, taking into account an inventory of the investments and other assets he already has to help him achieve those goals and estimating what he will need in the future. The objective of financial planning is to ensure that the right amount of money is available to the investor at the right time to enable him to meet the different goals in his life. These may be:

• Saving to buy a car costing around Rs. 4,50,000 after 2 years
• Purchasing a flat after 5 years with accumulated funds worth Rs.10,00,000 and the balance with a loan
• Investing for higher education of children where the money is required after 10 and 12 years 
• Protecting the family through insurance
• Planning for retirement and to meet expenses for 25 years after retirement 
• Managing debt 
• Investing to save taxes in an efficient manner
• Passing on wealth to the next generation (estate planning), etc

Financial Planning concept started in USA. It is a 6-7 years old concept in India. In India, investors used to invest most of their surplus money in fixed income instruments and investments were made as per the advice of insurance/ Mutual Fund  advisors whose advice was product driven. A Certified Financial Planner gives integrated solutions and value based advice. He gives need based advice in the interest of the clients. He identifies his financial goals which are arising at different stages of his life. He advises on Insurance requirement, retirement planning, children’s education planning, providing for their marriage, buying a home, buying a car, asset allocation, taxation planning and even estate planning. Every person who is earning money needs a good financial planner to help him achieve various financial goals.

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