What is Financial Planning?
Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a house, saving for your child’s higher education or planning for retirement.
Financial planning is a multi-step process that provides you with two important things: (1) An in-depth review of your current financial situation, and (2) a blueprint that shows you how to achieve your goals and objectives for the future.
A financial plan takes into account the inter-related nature of the goals that one has and helps in deploying the finances so that the high priority goals are given precedence & are met. Prioritisation of goals are important. In the financial plan, one will be able to make out if the various goals will be met, in the time-frames sought. If it becomes obvious that it will not be, the problem can be addressed now, by taking appropriate steps.
Once, the plan is laid out appropriate cash-flow planning would be done, risk assessment would be carried out and as per the unique requirements of the individual, appropriate investments/ insurance would be suggested.
Hence, a Financial Plan created for an individual is unique & customized. The plan is implemented & monitored to ensure proper outcomes. Financial Plan takes away the uncertainty out of life… and brings in peace of mind.
Financial Planning in India
Financial Planning internationally is a mature field. It has been around since the seventies in the western markets. However, in India, financial planning is just a few years old. There are still very few practicing professionals. The Indian market place has not been used to paying for advisories and have been relying more on sales people for information & advice.
Financial Planning advisories is however a paid service. Hence, though people understand the benefits of unbiased, professional advice, there is a certain reluctance to pay for it. But, that is changing. The reasons are not far to seek.
The Financial Services landscape is becoming more and more complex. Also, increasingly people are finding that they do not have enough time to devote towards their finances. Hence, the current environment is propitious for Financial Planning and more and more financial planners are setting up practice. This will take a while to permeate to all regions of the country. But a beginning has already been made.