The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, he is guided by the financial planning process to create a financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's specific goals. The key defining aspect of what the financial planner does is that he considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client.

Objectives

People enlist the help of a CFP (Certified Financial Planner) because of the complexity of performing the following:

1. Finding direction and meaning in one's financial decisions
2. Understanding how each financial decision affects other areas of finance
3. Adapting to life changes to feel more financially secure.

The work of a financial planner, from an individual client or family's perspective are:

1. To create the maximum probability that all financial goals (anything requiring both money and planning to achieve) are accomplished by the target date
2. To have a frequently-updated sensible plan that is proactive enough to accommodate any major unexpected financial event that could negatively affect the plan
3. To make intelligent financial choices along the way (whether to "buy or lease" whether to "refinance or pay-off" etc.).

Scope

Financial Planning should cover all areas of the client's financial needs and should aim the achievement of each of the client's goals. The scope of planning would usually include the following:

• Risk Management and Insurance Planning. Managing cash flow risks through sound risk management and insurance techniques.
• Investment and Planning Issues. Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending.
• Retirement Planning. Planning to ensure financial independence at retirement.
• Tax Planning. Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes.
• Estate Planning. Planning for the creation, accumulation, conservation and distribution of assets.
• Cash Flow and Debt/Liability Management. Maintaining and enhancing personal cash flows through debt and lifestyle management.
• Relationship Management. To understand and service the core needs of the client.
• Education Planning and marriage planning for kids and goal planning for other family members. Creating and planning for funds so that right kind of amount is available at right point of time.
• Other identified goals. Planning for any other identified goals or aspirations that you might want to achieve within the means and resources like owning a car, holiday planning, 2nd home, new business start up, etc.




The process




Financial Planning is a six-step process as follows:




Step 1: Setting goals with the client. This step is meant to establish the Client-Planner relationship and identify where the client wants to go in terms of his finances and life.




Step 2: Gathering relevant information on the client. This would include the qualitative and quantitative aspects of the client's financial and relevant non-financial situation.




Step 3: Analyzing the information. The information gathered is analysed so that the client's situation is properly understood. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are.




Step 4: Constructing a financial plan. Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals. The complete plan is presented and discussed. Alterations are made, if required, to the satisfaction of the client.




Step 5: Implementing the strategies in the plan. Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose.




Step 6: Monitoring, reviewing and re-evaluating the plan. Reviews and re-evaluation are the essence of the entire financial planning process. The implementation process is closely monitored to ensure it stays in alignment to the client's goals. Markets, investments, government policies, client's personal and financial circumstances and other factors will change over time. Reviewing goals, situations, strategy, and investments is vital to ensure that the client remain on track to meet short-term to long-term objectives. If there is any significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly. We recommend a review to each client at least on an annual basis.