ISO 9000 And Financial Planning

ISO 9000 is a family of standards, related to quality management systems and outlines the requirements needed to ensure organizations meet the needs of its customers while striving to meet their expectations.

There are many organizations taking advantage of these Quality Management Systems and ensure that they are always profitable and growing in the right directions benefitting their employees and shareholders.

ISO 9000 deals with the fundamentals of Quality Management Systems including the eight management principles, I call them success principles. These principles can be used by the management as a framework to guide their organizations towards improved performance. The following are the eight principles.

  1. Customer focus approach
  2. Leadership
  3. Involvement of everyone
  4. Process approach
  5. System approach to management
  6. Continual improvement
  7. Factual approach to decision making
  8. Mutually beneficial supplier relationships

There are five main success principles derived out of above eight which help organizations run their business profitable on a fairly continuous basis.

The success principles are:

  1. Results through process
  2. Continuous improvement of process
  3. Managing with facts
  4. Management establishing priorities
  5. Involvement of everyone

Now, a family also can be considered as a company, called YOU, INC. (Read book You, Inc. authored by Burke Hedges.). You, Inc. is based on the premise that each one of us is founder, CEO, and 100% stock holder in our own company: You Inc. If the husband and wife are the directors of this company, then, who do you think their shareholders are? -Their children, dependant parents, relatives, sometimes a family at their native place.

 In that case their Personal Financial Planning becomes the Quality Management System which uses the five success principles to ensure that the family’s expectations, goals, dreams are met. The family’s wellbeing is ensured today and in future too.

‘Inherently, each one of us has the substance within to achieve whatever our goals and dreams define. What is missing from each of us is the training, education, knowledge and insight to use what we already have (or able to create)’- Mark Twain.

And the Process of Financial Planning exactly does that what ISO 9000 does for organizations. It gives the education, knowledge and insight to the client and trains him/her to do things scientifically so that the results become predictable.

Let us see how these success principles are embedded in Financial Planning.

1. Results through process

Financial planning itself is a process which comprises of the following steps

  • Helping client set goals
  • Gathering all family and financial data
  • Analyzing all the data
  • Preparing client’s personal financial plan
  • Implementing the plan
  • Monitoring the results
  • Continued information

We call it as a scientific way of achieving our goals, expectations and dreams in our life. This helps to prevent any kind of economic consequences of any crisis that may affect one or his/her family.

Let us not go into the details of each and every step but yes, financial planning is a process. No doubt.

2.      Continuous improvement of process

We do this by upgrading financial planning software, reviewing periodically, investing in instruments for tracking client’s investment, investing into gadgets for fast and better communication with client, developing modern CRM systems, educating our own staff and many such things. Getting trained ourselves on a regular basis through training programs, seminars, study circles etc.,Don’t we?

3.      Managing with facts.

This is very important. We collect factual data from the client. His expenses, EMIs on loans, existing ongoing investments,  accumulated liquid assets, investment in real estate, insurance policies etc. No room for opinion. More accurate the data more accurate will be the financial plan. Though the recommendations, planning are based on certain assumptions, the assumptions are also based on certain factual data of past and present trends. Few example are inflation rate, rate of returns on certain investments, taxations etc.

4.      Management establishing priorities

Here the client is the management. Client may have many expectations, goals, dreams in his life. But a good financial planner always asks him to prioritize the goals. The goals may be children education, marriage, starting up in life, buying own house, car, own retirement planning. There won’t be a haphazard approach of achieving goals. No running around and no tension. There are certain goals called as serious money goals, such as children education, marriage and self retirement. But purchasing a car or vacation abroad may not be a serious money goal. It is important to establish priorities while working towards achieving all the goals.

5.      Involvement of everyone

A good financial planner always ensures that he is involving the spouse and sometimes even grown up children in the process of financial planning. Sometimes for a businessman client involving his CA helps a lot. Everybody in the family is aware of what is going on and as everyone knows about the goals of the entire family as such there does not exist conflict of interest of individuals.

Lastly, documentation is the base for ISO 9000. This document provides a general perspective on the quality management principles underlying the ISO 9000. It gives an overview of these principles and shows how, collectively, they can form a basis for performance improvement and organizational excellence. A written documented Financial Plan forms the basis for implementation, review and continuous improvements.

So, if a financial planner follows these success principles I do not think he will fail in helping client have a smooth journey through life. And then YOU, INC. will be a highly profitable organization. In fact the client will start discovering the CEO within!