1. Financial Planning

2. Financial Planning ??
Financial Planning is the process of meeting your life goals through proper management of your finances.
Goals may include buying a house, business setup, higher education of children, retirement planning etc.
Financial Planning provides direction & meaning to the financial decisions. It helps to evaluate the impact of financial decisions on other areas.

3. Financial Planning – Overview
Need for Savings
To fight / hedge against inflation
Growing dependency on savings with time
Meet the goals / objectives of life
Three R’s of Money
Reality – money is limited
Responsibility – use it wisely
Restraint – think of Future
Consumption
Cash
Saving
Income
Household Exp.
Repay Liability
Asset Purchase
Running Exp.
Emergency Needs
Physical Assets
Financial Assets
Interest /Rent /Dividends
Capital Appreciation

4. Why Plan ?? Life Cycle of Client –
Income
Age
Birth & Education
Earning Years
Retirement
22 yrs
60 yrs
Marriage
Child birth
Child’s Education
Child’s Marriage
Housing
38 yrs
Over yrs

5. Why Financial Planning ??
Multiple goals / needs / desires
Limited resources at disposal
Increased uncertainty and complexity in life
Increased complexity in investments and presence of multiple products
What
How
Helping know what they are really wanting
Helping them to achieve them
Making Sure
Ensuring that the client reach goals
Financial Independence / Self Reliance /
Peace of Mind

6. Financial Planning Services
As Wealth Managers you offer Financial
Planning services to your clients –
A ‘real’ financial advisor
“Value-added” + “Differentiated” services to the clients
Additional business mobilisation
Customer Acquisition
Customer Loyalty & retention
Differentiation & Branding
Customer References

7. Financial Planning Scope
Inheritance Planning
Capital Management
Charity Planning
Life Insurance
Cash Flow / Budgeting
Non-Life Insurance
Liability / Credit Planning
Investment Planning
Risk Management
Tax Planning
Goal Planning
Disability Planning
Retirement Planning
Business Capital Planning

8. Risk Profiling
Every person has a unique personal, family and financial situation. Their decisions depends on this uniqueness.
Each investment is coupled with certain risk element and each person responds to risk differently.
The amount of risk a person is willing to take depends on several factors such as his age, education, income, number of dependants, personal/ family goals and his mental attitude towards money.
The mental tolerance of a person in his mid-30s with a working wife and a kid would be much higher than a person who is retired and has dependant wife and aged parents. Hence, judging the risk tolerance of a client is an important step in financial planning.

9. Risk Profiling
Risk tolerance is the risk-taking ability of an individual.
‘Risk Profiling’ is a method used for determination of risk tolerance of an individual.
Risk Profiling includes a questionnaire with weights attached to the answers selected. The sum of weighted answers shows the risk tolerance of the client.
Chief determinants of Risk Profile are –
Age Group – younger the person, higher risk taking
Investment horizon – higher risk for long term plans (LIC)
Purpose of investment – capital growth, regular income etc
Volatility – market fluctuations affect investor behaviour

10. Financial Planning Process
Financial planning is the process of establishing personal and financial goals and creating a way to reach them
Establishing & Defining Relationship
Data Collection, including goals
Evaluation & Preparation of Plan
Presenting & Finalizing Plan
Recording / Implementation of Plan
Regular Monitoring

11. Financial Planning Skills
Traits:
Trust
Knowledge
Products & options
Tax & estate planning
Understanding Life & Wealth cycles
Judgment
Balanced thinking
Organised
Relationship building
Focus on Financial well-being of client
Principles
Integrity
Objectivity
Competence
Fairness
Confidentiality
Professionalism
Diligence
Compliance
Terminology