A Financial Planner or Personal Financial Planner is a Practicing Professional Who Helps People Deal With Various Personal Financial Issues Through Proper Planning

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A financial planner or personal financial planner is a practicing professional who helps people deal with

various personal financial issues through proper planning, which includes but is not limited to these

major areas: cash flow management, education planning, retirement planning, investment planning, risk

management and insurance planning, tax planning, estate planning and business succession planning

(for business owners).

Objectives

People enlist the help of a financial planner because of the complexity of performing thefollowing:

y Finding direction and meaning in one's financial decisions;y Understanding how each financial decision affects other areas of finance; andy Adapting to life changes in order to feel more financially secure.

The best results of working with a comprehensive financial planner, from an individual client or family's perspective are:

y To create the greatest probability that all financial goals (anything requiring both moneyand planning to achieve) are accomplished by the target date, and

y To have a frequently-updated sensible plan that is proactive enough to accommodate anymajor unexpected financial event which could negatively affect the plan, and

y To make intelligent financial choices along the way (whether to "buy or lease" whether to"refinance or pay-off" etc.).

Before working with a comprehensive financial planner, a client should establish that the planner

is competent and worthy of trust, and will act in the client's interests rather than being primarilyinterested in selling the client financial products for his own benefit. As the relationship unfolds,an individual financial planning client's objective in working with a comprehensive financial planer is to clearly understand what needs to be done to implement the financial plan created for them. So, in many ways, a financial planner's step-by-step written implementation plan of actionitems, created after the plan is completed, has more value to many clients than the plan itself.The comprehensive written lifetime financial plan is a technical document utilized by thefinancial planner, the written implementation plan of action is just a few pages of action itemsrequired to implement the plan; a much more "usable" document to the client.

Considerations

Personal financial planning is broadly defined as "a process of determining an individual'sfinancial 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." Theindividual's goals are used as guideposts to map a course of action on 'what needs to be done' toreach those goals.



Alongside the data gathering exercise, the purpose of each goal is determined to ensure that thegoal is meaningful in the context of the individual's situation. Through a process of carefulanalysis, these goals are subjected to a reality check by considering the individual's current andfuture resources available to achieve them. In the process, the constraints and obstacles to thesegoals are noted. The information will be used later to determine if there are sufficient resources

available to get to these goals, and what other things need to be considered in the process. If theresources are insufficient or absent to meet any of the goals, the particular goal will be adjustedto a more realistic level or will be replaced with a new goal.

Planning often requires consideration of self-constraints in postponing some enjoyment today for the sake of the future. To be effective, the plan should consider the individual's current lifestyleso that the 'pain' in postponing current pleasures is bearable over the term of the plan. In timeswhere current sacrifices are involved, the plan should help ensure that the pursuit of the goal willcontinue. A plan should consider the importance of each goal and should prioritize each goal.Many financial plans fail because these practical points were not sufficiently considered.

Scope

Financial planning should cover all areas of the client¶s financial needs and should result in theachievement of each of the client's goals. The scope of planning would usually include thefollowing:

Risk Management and Insurance PlanningManaging cash flow risks through sound risk management and insurance techniques

Investment and Planning IssuesPlanning, creating and managing capital accumulation to generate future capital and cashflows for reinvestment and spending

Retirement PlanningPlanning to ensure financial independence at retirement including 401Ks, IR As etc.

Tax PlanningPlanning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes

Estate PlanningPlanning for the creation, accumulation, conservation and distribution of assets

Cash Flow and Liability ManagementMaintaining and enhancing personal cash flows through debt and lifestyle management

Relationship ManagementMoving beyond pure product selling to understand and service the core needs of the

clientEducation Planning for kids and the family members

The process

The personal financial planning process is according to ISO 22222:2005 a six-step process asfollows:



Step 1: Setting goals with the client This step (that is usually performed in conjunction withStep 2) is meant to identify where the client wants to go in terms of his finances and life.

Step 2: Gathering relevant information on the client This would include the qualitative andquantitative aspects of the client's financial and relevant non-financial situation.

Step 3: Analyzing the information The information gathered is analysed so that the client'ssituation is properly understood. This includes determining whether there are sufficient resourcesto reach the client's goals and what those resources are.

Step 4: Constructing a f inancial plan Based on the understanding of what the client wants inthe future and his current financial status, a roadmap to the client goals is drawn to facilitate theachievements of those goals.

Step 5: Implementing the strategies in the plan Guided by the financial plan, the strategiesoutlined in the plan are implemented using the resources allocated for the purpose.

Step 6: Monitoring implementation and reviewing the plan The implementation process isclosely monitored to ensure it stays in alignment to the client's goals. Periodic reviews areundertaken to check for misalignment and changes in the client's situation. If there is anysignificant change to the client's situation, the strategies and goals in the financial plan arerevised accordingly.

[edit] What is a f inancial planner's job f unction?

A financial planner specializes in the planning aspects of finance, in particular personal finance,as contrasted with a stock broker who is generally concerned with the investments, or with a life

insurance intermediary who advises on risk products.

Financial planning is usually a multi-step process, and involves considering the client's situationfrom all relevant angles to produce integrated solutions. The six-step financial planning processhas been adopted by the International Organization for Standardization (ISO).

[1] Financial

planners are also known by the title financial adviser in some countries, although these two termsare technically not synonymous, and their roles have some functional differences.

Although there are many types of 'financial planners,' the term is used largely to describe thosewho consider the entire financial picture of a client and then provide a comprehensive solution.To differentiate from the other types of financial planners, some planners may be called

'comprehensive' or 'holistic' financial planners.

Other financial planners may specialize in one or more areas, such as insurance planning (risk management) or retirement planning.

Financial planning is a growing industry with projected faster than average job growth through2014.[2]



RETIREMENT PLANNING

R etirement, is the beginning of a new life, the start of a second adulthood. Are you financially prepared to pursue the life that you have planned to lead when you actually retire? Financial planning for retirement is very important. One should make sincere efforts to plan for retirement.

Nobody can predict the future because you don¶t know what will be return on your savings or what will be the inflation rate when you actually retire. How much money will be availablethrough social security, if social security exists when you retire. Unfortunately, most of us startthinking about retirement planning when hardly 10 years¶ time is left for our retirement.Effective retirement planning requires foreseeing the type of life you wish to lead after retirement. Do you like traveling every year? Would you like to pursue your hobbies that youcouldn¶t during your peak working years ± like gardening, writing or visiting places you alwayswished to? Retirement is like playing second and longest innings of one¶s life. Enjoying this phase comfortably and peacefully requires certain basics of retirement planning.

Concept of retirement planning has changed over the years. Retirement planning in the 21st

century needs different set of considerations from what it used to be. The current employmentconditions have changed. In the past, Social Security Benefits, Personal savings and DefinedBenefit Pension were considered main resources for leading a comfortable retired life. In presentscenario, one cannot solely depend on these resources. This is the era of early retirement whichcould be due to health reasons or layoffs. Thus means that you may have a shorter workingcareer and longer retirement as compared to the earlier generation.

When you retire from your job you, stop getting your paychecks. A part from depending on your savings, you certainly need some regular source of monthly income to take care of your day-to-day expenses. Getting a part-time job or starting a home-based business is good option to helpyou lead a happy and comfortable retirement life.

Before you stop working, do follow some basics of retirement planning. It is critical to evaluateyour assets and liabilities to ascertain your Net Worth. A realistic evaluation of what you ownand what you owe is vital to take care of your financial needs during your retirement years. Your assets mean all that you own - your Regular IR A and Roth IR A? Calculate the value of your 401(k) or 403(b) workplace retirement plans. If you were self-employed, did you create any self-employment retirement account like SEP-IR A or Traditional IR A? Evaluate your other assetslike annuities or life insurance policies. This will give you real picture of your assets which iswhat you actually own. Other things that will form part of your assets are your personal properties like house, car, investments etc. Equally, if not more, important part of retirement planning is assessment of your liabilities. Most of us reach retirement date with some unsettled

debts like home mortgage, car loans or credit card debt.A

ssess all your debts and work out your net worth when you actually retire from active working life.

Getting a clear picture of your projected retirement cash-flow is vital before you actually retirefrom active life. If you take into consideration basics of retirement planning as suggested above,it will help you understand what will be your income from different sources, which will help youin planning a happy retirement.



The process of retirement planning aims to:

1. Assess readiness-to-retire given a desired retirement age and lifestyle, i.e. whether onehas enough money to retire; and

2. Identify actions to improve readiness-to-retire.

Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investmentgoals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contractsand more commonly via collective investment schemes e.g. mutual funds or exchange-tradedfunds).The term asset management is often used to refer to the investment management of collective investments, (not necessarily) while the more generic fund management may refer to all forms of institutional investment as well as investment management for privateinvestors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth

management or portfolio management often within the context of so-called "private banking".

The provision of 'investment management services' includes elements of financialstatement analysis, asset selection, stock selection, plan implementation and ongoingmonitoring of investments. Investment management is a large and important globalindustry in its own right responsible for caretaking of trillions of yuan, dollars, euro, pounds and yen. Coming under the remit of financial services many of the world's largestcompanies are at least in part investment managers and employ millions of staff andcreate billions in revenue.

Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financialservices. High Net Worth Individuals (HNWIs), small business owners and families whodesire the assistance of a credentialed financial advisory specialist call upon wealthmanagers to coordinate retail banking, estate planning, legal resources, tax professionalsand investment management. Wealth managers can be an independent CERTIFIEDFINA NCIAL PLA NNER�, MBAs, CFA Charterholders or any credentialed professional money manager who works to enhance the income, growth and tax favoredtreatment of long-term investors. Wealth management is often referred to as a high-levelform of private banking (for the especially affluent). One must already have accumulateda significant amount of wealth for wealth management strategies to be effective and isalso one of the key areas that are growing at a tremendous rate.

Wealth management can be provided by large corporate entities, independent financialadvisers or multi-licensed portfolio managers whose services are designed to focus onhigh-net worth clients.

[citation needed ] Large banks and large brokerage houses createsegmentation marketing-strategies to sell both proprietary and non-proprietary productsand services to investors designated as potential high net-worth clients. Independentwealth managers use their experience in estate planning, risk management,and their



affiliations with tax and legal specialists, to manage the diverse holdings of high networth clients. Banks and brokerage firms use advisory talent pools to aggregate thesesame services.

The events of 2008 in the financial markets caused investors to address concerns within

their portfolios. "The past 18 months have challenged traditional thinking about investingand asset allocation, diversification, and correlation. For individual investors, risk tolerances have been tested, investment assumptions have been overturned, andfundamental truisms have been questioned."

[1] For this reason wealth managers must be

prepared to respond to a greater need by clients to understand, access, and communicatewith advisers regarding their current relationship as well as the products and services thatmay satisfy future needs. Moreover, advisors must have sufficient information, fromobjective sources, regarding all products and services owned by their clients to answer inquiries regarding performance and degree of risk-at the client, portfolio and individualsecurity levels. "This state of affairs poses a dilemma for wealth managers, who, for ageneration, have adhered to the core principles of asset allocation and earned their keep

by preaching the mantras of 'buy and hold', 'invest for the long term', and when things gettough, 'stay the course'.´ [2]

Private bank ing is a term for banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually viadedicated bank advisers. It should not be confused with a private bank , which is simply a non-incorporated banking institution.

Historically private banking has been viewed as very exclusive, only catering for high net worthindividuals with liquidity over $2 million, although it is now possible to open some private bank

accounts with as little as $250,000 for private investors.

[citation needed ]

A

n institution's private banking division will provide various services such as wealth management, savings, inheritanceand tax planning for their clients. A high-level form of private banking (for the especiallyaffluent) is often referred to as wealth management. For private banking services clients payeither based on the number of transactions, the annual portfolio performance or a "flat-fee",usually calculated as a yearly percentage of the total investment amount.[1]

The word "private" also alludes to bank secrecy and minimizing taxes through careful allocationof assets or by hiding assets from the taxing authorities. Swiss and certain offshore banks have been criticized for such cooperation with individuals practicing tax evasion. Although tax fraud is a criminal offense in Switzerland, tax evasion is only a civil offence, not requiring banks tonotify taxing authorities.[2]

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A Financial Planner or Personal Financial Planner is a Practicing Professional Who Helps People Deal With Various Personal Financial Issues Through Proper Planning