Financial Planning Process that Indian Planners Follow

The great brands worldwide are known for their consistent qualities and this substantially is delivered by the processes they follow. For example – KFC is world famous with its 11 herbs and spices secret recipe. So have you ever wondered how a financial planner makes your plan? or the financial planning process followed by them.

Financial Planning in India is a practice that is evolving and hence financial planning process are not standardised. So every financial planner follows a custom approach that is shaped with his or her experience and this may be influenced by your needs. That said, here is a gist of the framework that you can expect from a decent financial planning firm.

How to make a financial plan for family?

First, between you (as a client) & the planner, both of you would need to agree on the scope of engagement. What is your need? What does the planner specialize in? What will be the fees and payment terms? Once these are agreed, the planner on-boards you to the firm and introduces next steps and starts communicating with you. Now, here you take a lead and share your current financial environment details with the planner to help her better understand where you stand? Post this, the planner takes over and appropriately presents the draft plan. Once the plan is approved and finalised, the plan execution starts. Based on the scope of engagement, you then review the plan at an agreed frequency.

Sounds good? Alright, let’s see each of these steps in detail now.

Financial Planning Process suggested by FPSB


financial planning process

Step by Step Financial Planning Process 

On-boarding: A Financial planner sends you a formal letter of engagement outlining the terms and conditions of the engagement. You are required to review and accordingly approve the same. The planner would also need your assistance to complete the KYC (Know Your Customer) mandate. In this stage, you also need to make the payment of the fees as per the agreed terms. Normally this is the first step in financial planning for every planner.

Tip: Many families are very enthusiastic in the beginning but take much longer to get started. If you are busy, we suggest you let your planner know that you will take longer.

Discovery: Now your planner would launch the data gathering exercise to gather information about your current financial state. She may follow a checklist, questionnaire, a web form or a discussion mode to gather the information. You essentially need to provide details about your cash flow, assets, liabilities and goals. This needs a bit of comprehensive work at your end. If you are reasonably organised, this will not take much time. Your planner will also launch an exercise called Risk Profiling to better understand your risk appetite via a checklist or a web form or an online questionnaire.

Tip: This will help both sides to understand risk appetite better, so you should be as meticulous and detailed as possible when answering the questionnaire.

Read – Real Meaning of Financial Planning

Planning: Now, the good news is that planner takes over from you 🙂  She applies the best of her experience and leverages her framework to put together a best in class financial plan for you. She has been through many such situations so when she looks at your data, she gets a feel about your current financial situation and starts putting together a roadmap for you. When she is done, both of you meet and discuss the draft plan. She may have to re-work the plan based on your inputs. You may have to get back with further inputs. After the iterations, finally, the plan is finalised 🙂

Tip: Involve your spouse. If you go through the draft plan before the plan call, then you can be ready with a list of questions that you may have 🙂

Execution: It’s your plan. You lead the implementation. The planner supports you. What does your planner do at this stage and what is expected of you? This depends upon what you signed up for. In a normal situation, most families like the planner to help through the implementation. This means the planner and her team gets actively involved and work closely with you to execute the agreed actions items. The execution can be very fast or very slow. This depends upon many things. A key differentiator is you being able to provide quality time and required documentation.

Tip: Prioritise your actions. Make 30/90/180 days action plan with your planner.

Review: Hey, it’s time for the check point. Both of you should take a stock on where you are? How is the plan implementation progressing? Do you need any help? Does your planner have any feedback? Plan reviews can also include checking your portfolio performance, revisiting the strategy and anything on personal finance that bothers you. Initially the focus is more on the implementation of plan. The reviews are your communication bridge and they are meant to enable both the sides.

Tip: Work jointly with your planner and set the agenda of review meetings in advance.

Sounds cool? Wait, we are not done as yet. We know you are likely to have more questions. So here are answers to few FAQs (Frequently Asked Questions).

Must Read – Importance of Financial Planning

Do all planners follow a similar financial planning process?

No, above is a broad framework. You can certainly expect deviation. Get clarity before you start the engagement.

How is the plan delivered? Face to face?

Well, this depends. Some planners will prefer to meet you at least initially, may be at their office. Many planners work remotely especially if you are located away. You should clarify this upfront.

Who delivers my financial plan?

If your planner is having an individual lead practice, she may herself deliver the plan to you. If you are dealing with a mid or large sized firm, they may have a team of experienced planners. Feel free to speak to the planner to know more.

How much time does it take to make the plan?

This depends upon few factors like your engagement need and planners occupancy. It can take about 2-3 weeks to deliver the first cut of your plan. Check – Financial Plan doesn’t work in bits & pieces 

How is my financial plan made?

Your planner could be using a financial planning software. Alternately, your planner could also use his own proprietary model based on spreadsheets. In any case, a good financial planner will ensure that the plan is customised for you.

What tools are used?

Your planner may use various checklists, software (risk profiling, financial planning, research & portfolio management), template, methodology and applications to deliver your plan.

How is my information confidentiality maintained?

You can expect that a decent financial planning firm would have adequate controls to avoid information leaks. This includes sharing information on a need to know basis, having standard workstation controls, anti-virus, updated OS patches, licensed software and restrictions on portable media.  Please check the specifics with your planner.

Now that you know all about the recipe, it’s time to jump right in and taste the dish, i.e. get a financial plan made.

If you still have any questions regarding financial planning process – feel free to add in the comment section