What is Financial Planning ?

If you could achieve your financial goals by simply putting money away in the bank, you wouldn’t need a financial plan. Unfortunately, life is a little more complex – it’s hard to understand the intricacies of investment, taxation and ever-changing regulations, so you need professional help.

Yet many of us resist seeking advice as if our financial future weren’t just as important as our health or our children’s education. We often decide to manage our financial affairs ourselves or leave it to someone we know, perhaps an accountant or a solicitor, which is a bit like buying vegetables at the butchers. Financial planning is a specialist profession and you should make sure that you’re getting advice from a properly qualified person.

Let us illustrate with a simple example:

After completing education, two students Ram and Shyam were looking for Life Insurance plan. Both of them want a life insurance cover of 50 lakh rupees and policy period is 30 years.

Ram is looking for a plan which provides a life coverage but at the same time, help him save tax and provide a lump sum on maturity. Hence he buys an Endowment Plan.

Shyam, on the other hand, is looking just to get pure life cover. Hence he buys a Term insurance plan.

Who do you think made a wiser decision?

Ram Scorecard:

Age: 25

Plan: Endowment

Term: 30 years

Sum Assured: 50 lakh

Yearly premium: 15,000 /- (average)*


Shyam Scorecard:

Age: 25

Plan: Term Plan

Term: 30 years

Sum Assured: 50 lakh

Yearly Premium: 4,000

(* figures are based on actual quotes of reputed life insurance companies)

Now instead of investing 15,000 rupees like Ram, Shyam invested just 4,000 and used 11,000 for investment with 10% annual compound interest. By the time he turns 60, he gets a return of whopping  2.06 crore rupees!!

Financial Mistake: Considering Life Insurance as an investment and not comparing and researching other insurance plans and investment options.

Learning: Investment planning needs a lot of research and knowledge, with the right amount and right path you can achieve your goal.

A financial planner will help you reach your goals; even if retirement may seem a lifetime away, the sooner you start planning the more likely it is to achieve financial independence and peace of mind.

You can find a CERTIFIED FINANCIAL PLANNER® professional or CFP Professional Practice by using FinVizer website.

Not all financial planners are the same. By looking for a financial planner that is a member of the FPSB, you can rest assured that they are highly qualified, experienced and will do the right thing by you. Members of the FPSB can be distinguished from other financial planners because they:

  • have a duty to put your interests first
  • adhere to a strict Code of Professional Practice and Code of Ethics
  • are accountable to India’s leading professional associates
  • complete training every year to keep their knowledge and skills up to date
  • are obligated to explain and document their fees and charges to you in a clear and transparent way.

You can find an CFP member, CERTIFIED FINANCIAL PLANNER® professional by using FinVizer.com

A CERTIFIED FINANCIAL PLANNER® professional has achieved the highest financial planning qualification worldwide. There are about 1800 CERTIFIED FINANCIAL PLANNER® professionals around India.

Entrusting your finances in a professional is an important decision. One of the factors which you need to take into account is the fact that currently, the law allows a wide range of individuals to call themselves a ‘financial planner’ and provide financial advice in some shape or form. Those who can call themselves a ‘financial planner’ includes the following:

  • product sales representatives
  • life insurance brokers
  • stock brokers
  • general insurance brokers
  • mortgage brokers
  • real estate agents
  • financial information service (FIS) officers
  • financial counsellors
  • bank tellers
  • accountants
  • lawyers
  • paraplanners
  • business development managers (BDMs)
  • client service representatives
  • tax agents
  • property developers
  • auditors (especially those who deal with SMSFs).

Be wary of people who call themselves financial planners, but are not sufficiently professional or even qualified. Alarm bells should start ringing if you come across any of the following signs:

  • Doesn’t have professional license, qualifications or FPSB membership
  • Doesn’t take time to learn about your individual circumstances, needs and goals
  • Is more interested in selling you a product than developing a strategy for you
  • Promises you the world (ie high returns and low risk) and tells you not to worry
  • Avoids questions and withholds information
  • The fees and charges are not clear or appear excessive.

The advice you seek can be holistic (which takes into account your full financial situation, needs and goals) or scaled (where you only seek advice for particular purposes).

Scaled advice means that you could see a financial planner for a particular purpose that is most relevant to you at any point in time – without the need to go through a holistic process that takes your full financial situation into account.

While scaled advice can make financial planning more affordable, it’s important to not lose sight of the bigger picture. This is where a professional financial planner can help you to take a step back and review your total financial situation.

Global markets are shifting constantly, and volatility has become the norm. Investors can get understandably nervous and concerned about the fall in the value of their investments. When emotions take charge, it’s important to avoid falling into some of the traps that appear when markets are unpredictable.Understanding what’s happening and how these events can impact you will help you to make confident decisions about your financial future.

Your financial planner will help you to take a step back and look at the bigger picture, and make the best decisions for your financial future.

Good and reputed financial planners disclose clearly to you all forms of payment and fees. The cost to you will depend on the complexity of your financial situation and plan, as well as the fee method the planner uses.

There are various ways to structure fees, and it typically starts with an initial fee to cover identifying your needs, developing a strategy and implementing the recommendations. There could also be administration and ongoing service fees for regular reviews of your plan to ensure it meets your changing circumstances.

Unlike other financial planners, FinVizer members abide by rules that require them to explain fees and charges in a clear and transparent way. An FinVizer member is required to make sure you understand and approve the fees before you pay or go ahead.