Grow with Financial Planning

Reap Financial rewards with Financial Planning

Benefits of financial planning

How financial planning can get you well stable finance career? Learn the benefits of Financial planning

Financial Planning education imparts the requisite knowledge and skill-set, that enables you to provide quality advice to your client on a consistent basis and create wealth for your client’s in the long run.

1. You would know the tax benefit opportunities for your client based on his residential status:
As a financial advisor you will know how the tax liability of your client, who needs to go abroad for job requirement, would change if he travels before or after 29 September in any year. If he travels before the said date he would become NRI for tax purpose for the relevant AY and would not pay taxes on the income earned abroad. And in case he travels after the said date he need not pay tax on the income earned in India and abroad. Tax planning involves utilizing exemptions, deductions, rebates and relief’s provided in the Income tax Act.

2. You would know the advantage of paying the EMI in beginning of the month viz a viz end of the month:
You can save lot of money for your client by a simple advice to pay EMI for a housing loan in the beginning of the month. Consider a Housing loan of 30 lakhs for 20 years at 11 %, if you choose to pay EMI at the end of the month you would pay 67000 more which is over 2 % of your loan amount ! Time value of money concepts in financial planning helps you to analyze and compare different cash flows and choose the most beneficial set of cash flows to pay or receive.

3. You will be able to calculate the exact retirement corpus that one would need for peaceful retirement.
Let’s take a case of a person who has expenses of 3 lakh per annum today, he would need a retirement corpus of 1.70 crore (assuming inflation of 5 % and rate of return of 9 %). Retirement planning assumes importance because of people’s inability to earn in sunset years, inflation and lack of social security. Financial planning helps you work out how much to invest for your sunset years to be truly blissful.

4. Client’s look for growing their net worth every year, your advice would enable them to enhance their net worth year on year:
With Personal Financial Planning tools like – Discipline, Diversification and Investments in accordance with clients risk appetite you can ensure your clients growth in net worth year after year and extremely satisfied clients.

5. You will be able to analyze and rank the Top 10 mutual funds out of the 1500+ schemes available:
Most people select MF funds on the basis of past Month / year’s performance. Chasing recent performance could prove tricky because it could be an aberration. Financial Planning emphasizes to track investments like Mutual funds over 5/7/10 years along with Fund managers expertise, experience and his association with the fund. Further one needs to check out if the objective and investment strategy of the fund matches the investor needs. Other parameters like expense ratio, turnover ratio and standard deviation also needs to be considered.

6. Insurance is must and a necessary expense (not an investment or Tax saving instrument as projected). With Financial Planning, you will be able to help your client reduce his insurance expenses and at the same time enable him to cover all the risks.
Insurance is the most misunderstood concept. It is looked upon as a tax saving or an investment tool. Insurance is an economic tool to transfer the risk. Taking Life Cover more than needed is a waste of precious resource and underinsurance could put the family of deceased to hardship. Further it needs to be assessed if insurance is required for property & other valuables and professional negligence. Financial planning teaches you “How to plan for your client’s insurance requirement”.

7. Financial Planning will enable you to make appropriate investment decisions for your client.
If your client looses his sleep over investment decisions, there has been a misinterpretation of your client’s risk taking ability. Financial Planning lays a strong emphasis on appropriate risk profiling. It involves both quantitative and qualitative analysis for before zeroing on a customers risk profile.

8. One single solutions to all your clients is a disaster. Financial Planning equips you in providing different solutions to different client based on his need.

Have you been trying to sell Mutual Funds or Insurance products to all your client’s – be it someone who is young and just started his career or middle aged person who has worked for ample years or a person who is retired? Well if so, you must have had low sales conversion and dissatisfied clients. There is a need to shift focus from product sales to a solution provider. You need to understand the financial goals of the client and work towards achievement of the same through a financial plan.

9. Enables you to face the challenge of ever demanding clients.
Client’s today have ready access to information on financial products & services via various sources – media, television, internet & print. The awareness level of investors is increasing with respect to the working and benefits of the various products & services available in the market. Therefore it is becoming increasingly difficult to practice on “only commission” model. Financial planning widens your scope of services and enhances your knowledge and skill set enabling you to switch to a “commission + fee” or “pure fee” model. In this model, financial planning becomes the core of advisory services and products become the means to achieve the plan.

10. Increase your clientele – how many of your clients have recommended your service to their friends and family?
If a client recommends you to others, it speaks of your quality of advice and the relationship you share with your clients. But if they don’t, you need to do a bit of self introspection and figure out where are you lacking?