FAQ on Financial Planning Services
Very often in life, we don’t seem to have a financial plan. This is a debatable topic, still let’s try to understand and find out why I should have financial plan. Everything “just happens”. Things are moving on each passing day in our financial lives too.
Q.1 Why Should I do Financial Planning?
A. Financial Planning is a ‘PROCESS’ in which we assess:
Where you are now?
What you may need in the future? And
What you must do to reach your goals?
Simply stated Financial Planning is a process to fill the gap between your ‘Current’ position and your ‘Future’ position. Financial Planning gives you a road-map for your future financial goals and objectives. It is like a Map or Guide which helps you reach the exact destination in the desired time by properly utilizing the adequate resources.
It is also important to note that Financial Planning is customized for individual needs, wants and dreams vis-à-vis their available and future resources. It is a myth, that Financial Planning is restricted to Investments. As a matter of fact investment is only a minute aspect of Financial Planning. The above explanation answers the question as to why you should be doing Financial Planning and also shows a holistic and need based approach which is used in Financial Planning to achieve your future goals and objectives.
Q.2 I have taken Several Insurance Policies and routed my investments through them. What you have to say?
A. It is very important to understand the difference between Insurance and Investment. Premium of insurance products having investment element are heavily loaded and also the return from these are lower than a bank F.D. The smarter way would be to segregate insurance from investments and accordingly built a corpus for your retirement to generate higher returns on your investments and to pay minimum amount of premium for your insurance protection.
Thus, insurance should be taken only to cover the risk part of your life. God forbid anything happens to you, your family should not fall into trouble waters in financial sense. This could be well taken care by taking ‘Term Insurance’ policies.
Q.3 I have already burnt my hands in equity market. What are the other investment avenues you can offer?
A. There are avenues which ensure capital protection and lower returns. Also, there are avenues, like equity, with no capital protection but with a potential to deliver better returns. The avenues which we offer are basically in conjunction with your needs, prioritized life goals, time horizon of for life goals, your risk profile, liquidity requirements etc. Thus we need to get an answer to these questions to advise you proper investment avenue suitable to you.
Q.4 All my investments are in place. I am satisfied with the investments. Most of them are in PPF, Term Deposit and risk free investments. What you have to say about it?
A. Satisfaction comes when you achieve your financial goals and objectives. Satisfaction of investments that they are safe and are growing at nominal rate is usual and a feel good factor for every individual. However, we would only recommend you to ensure that:
- Are your investments able to meet your life’s future goals and objectives?
- Are they in a position to beat inflation?
- Will you be able to have the money at the time it is required?
All your investment are in debt, so it means that you are either conservative investor who does not believe in taking any risk even at the cost of generating very little post tax return or you have had a bad investment experience in the past. We recommend you to align your investments with your future goals and objectives.
Q. 5 What are the fees you charge? Is it one time or every year?
A. Our professional fees that we charge varies based on an individuals goals and objectives, their current situation in which they are and the number of hours which our ‘Financial Planners’ will have to put in preparation of an individuals Financial Plan. The same can be known only once we have understood your case and discussed the same with the Planners. You would be informed about the ‘Professional fees’ and only after your approval and receipt of 50% of fees in advance, our planners would start working on the plan. The balance would be payable after the presentation of the plan.
However, to give you a range of our fees, we could tell you that for a ‘Comprehensive Financial Plan’ the fees could range from Rs. 10,000 to Rs. 25,000.
Q.6 Who will take care of my investment? Is there a review system?
A. We have two types of reviews. One is review of Investment Portfolio after the Financial Plan is implemented with us and the other is the review for the Financial Plan. The investment portfolio reports are mailed to clients every quarter. The Client also welcome to speak or consult us at all times.
We review your ‘Financial Plan’ on yearly basis, so that we can see whether your plan & investments are performing according to the recommendations we had given to you.
Q.7 What is the value I will get for paying Rs. 10,000 plus for a Financial Plan?
We pay money to products & services which add value to our lives. This value will be derived from our recommendations on “right things you are not doing” and “wrong things you are doing”. Taking corrective and preventive actions helps you avoid costly mistakes and pursue opportunities. The value of financial planning to a client’s life cannot be quantified… it is beyond numbers.
As we believe that more than “Investment Returns”, Financial Planning is about leading a disciplined financial life, having clarity of goals, being organized with your data and documents prepare for emergencies in life, take joint financial decisions etc – all leading to peace of mind, ability to achieve more and lead a balanced life.
If you are thinking of “how much extra returns I will get by paying Rs. 10,000 plus?”, our services may not be the right one for you.
Q.8 My savings are too low. I hardly save any money for investment? All my income goes in family expenses and repayment of loans EMI. How can you plan for my future?
‘Debt Management’ and ‘Disciplined Investing’ – both are the most important aspects of financial success. You may be currently not saving, however if you are aware about your future needs and objectives, you would start monitoring and budgeting your income and expenses.
Through proper management of your finances we can help you identify cost efficient ways of investing also. Through budgeting and tax efficient planning we can help you reduce your expenses, and save your taxes thus putting more money in your pocket to invest/save. Also you may have to look at the probability of earning additional income, to meet your goals.
Q.9 I have never thought about engaging a financial planner for myself. As a financial advisor do I really require a financial plan?
We believe that every family who can afford should have a written financial plan and opinion of an external professional. It’s no different for you as a financial advisor. It’s just that you may need a little different level of service and understanding by the planner advising you. All accomplishments start with a decision to try, so explore.
Q.10 My money management philosophy might be different from yours. What if I don’t agree to your recommendations?
We understand that you may already know many things about how to manage money. Understanding your investment philosophy and money beliefs will be an integral part of the data gathering process. In fact we can have a healthy discussion over “your way” vs. “our way”.
The final set of recommendations and action plan will be based on your comfort level with our strategies. Moreover you are free to get only the first-time comprehensive financial plan done and not subscribe to ongoing services giving you the freedom to do what you want to do.
Q.11 I would like to invest and buy products on my own. Would you mind that?
We don’t sell any products or accept any commissions from a product manufacturer.However in our ongoing services after the financial plan is done, we do give recommendations on which particular product to buy and which is the most economical & convenient way to buy them.
But if you want to do it on your own… it’s perfectly fine with us. As long as you are implementing recommendations in some way… the client-planner relationship can be healthy and go on for a long term.
Q.12 If I give you my portfolio, how much return would you guarantees?
We guarantee unbiased advice. If I guarantee returns I could have my license cancelled, because SEBI strictly disallows anyone to guarantee returns from equity investments. However, without my guarantee even if you look at the past performance of equity markets they have average returns of around 14-17% p.a.
There are Debt products which guarantee returns. Also, there are Schemes available which guarantee capital protection and also certain insurance schemes which guarantee returns.
However, if you are looking at invest returns from equity, mutual funds etc. the returns cannot be guaranteed. However diversification and several other strategies could help you prevent loss of capital and generate above average returns.
Q.13 I have no finance background. I want to start investing, but I am afraid of taking risk. What would you suggest me?
When you have a disease you have no idea about it because you may not have not studied medicine, hence you approach a qualified doctor. Similarly we are experts in personal finance and we understand our clients may or may not have finance background. We ensure you that as professionals we adopt a systematic and step by step approach toward planning your life’s
financial goals and objectives. You could trust qualified professionals like CFP Certificated who would be in a better position to give you unbiased advice.
Q.14 My spouse may not agree to this idea.
Getting a buy-in from your spouse is very critical in the overall effectiveness of working with a financial planner. Although you may be keen on getting a financial plan done, without the cooperation from your spouse… financial planning can become an exercise yielding no results or creating difference of opinions. Even if you dominate family’s money management decisions…take this as an opportunity to involve your spouse so that he or she co-operates and is accountable in fulfilling family dreams and lead a disciplined financial life.
In case you have apprehensions about your spouse not agreeing to this idea of hiring a financial planner… we would recommend you to persuade her to at least go through the data gathering meeting (which is complimentary). And then take a decision whether to pursue further or not. Many people realize the need to hire a financial planner after they start talking about their money matters with a trustworthy and competent planner.
Q.15 How can you help me save my taxes?
We have qualified professionals ‘Certified Financial Planners’ etc. who would guide you with the tax saving aspect also. Only after understanding your current income and expense details, we can recommend you sound tax planning strategies that would not only help you save your current taxes but also help you plan in advance to save future taxes. Thus, effective ‘Tax Planning’ is a part of Financial Planning process.
Q.16 I want to subscribe to PCFP services, but I can’t afford your fees.
If this is REALLY a concern, then we would appeal to you to at least prepare a financial plan by yourself using your own knowledge and information which is freely available on the public domain. But we feel that if your family income is more than Rs. 5 lakhs per annum, you can definitely afford our first-time & on-going financial planning fees. Even if your income is less than 5 lakhs, you should consider at least getting the financial plan done for the first time. You may implement, monitor and review the financial plan on your own.
Q.17 How Confidential would be the client-planner relationship?
As in any client-planner relationship, we would maintain complete confidentiality about you engaging our services. At any of our online platform, forums, events and training programs… we will not reveal this engagement or talk to you as a client. Unless you ask for it.
Q.18 I already have a financial plan in place, will your services be of any help?
If you have got your plan done from another qualified financial planner, then no. We would suggest you to continue your relationship with him / her. But if you have done it on your own… let’s talk!
We know that you are already a financial professional and may know many things and be aware of what is right and wrong. But ‘knowing’ is different from ‘doing’. And ‘doing’ is different is “Doing it consistently & effectively”. That’s where we come into picture and guide you to lead a disciplined financial life, fulfill your goals and get peace of mind.
Q.19 Are you competent enough to handle my finances and guide me?
We cannot say if we are more or less competent than you in offering financial advisory services. But we are confident that we can do it better than “you can do it for yourself”.
Q.20 How can I get Started?
Those who are really serious about sorting out their finances and achieving their goals. They would want proper control over their goals and would want to ensure that they are achieved in a pre-meditated manner, instead of leaving it to chance. For further enquiry, you may email us at firstname.lastname@example.org or call us at +919816002197 and request for an appointment to discuss your requirement and proceed with the engagement.
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