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Things may come to those who wait, but only the things left by those who hustle.

-Abraham Lincoln

Since I work as a Financial Planner, I come across many people who have big dreams, but they are reluctant to hire a financial advisor. Most of the clients have an array of questions regarding how a Financial Planner works. Therefore, I decided to dedicate one chapter to shine the torch on how a Financial Planner operates. This chapter will help you to understand the backstage story or an advisor and the best practices that I follow.

How Does a Financial Planner Work?

Being a CFPCM (CERTIFIED FINANCIAL PLANNERCM), I understand people’s goals and then look into the future to see what they would need to accomplish their goals.

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. (Source: Wikipedia).

More than 77% of retirees in Canada work with a financial planner to plan their retirement fund and goals for over a decade, says a study in Canada. If such a developed country has a significant population that knows how a financial planner works for them, it is the time that we also understand the same.

To help people make smarter decisions, I advise on specific methods and processes. I follow a system driven approach, which makes it easier for me to track all the investment decisions and provide the course corrections. Corrections that may be needed to keep the market movements or personal money equations balanced, always. As the captain of the ship, my role is to steer the ship away from dangers; to stop and then to provide the right direction. Direction, for my clients, to reach their financial destinations.

Let’s analyse how a financial planner works

  1. First, you need to find out if you need a financial The visual here highlights the best available options. So choose if you have one more such need.

2. Once you are clear what you are looking forward to, the financial planner now tries to understand your specific goals more

3. Here a significant point to be noted is that people who are looking at wealth creation or just looking at returns may not be requiring the services of a financial They can go straight to a wealth manager or an investment advisor.

what is financial planning

4. Now that financial goals are clear, the planner asks some necessary details to understand your vision of money, wealth and investments that you have already At this stage, he would show you the following kind of a visual to explain what all are the areas of personal finances that he is going to be working on with you.

how do i do financial planning

5. He would then ask you for more detailed information about your income, expenses, current investments that have been made and exact future These could be goals like your children’s education, their marriage, house buying decisions, retirement, etc. He would also focus on evaluating your life and health insurance and check if they are adequate.

6. Once your goals are made on a timeline, your financial planner offers a step-by-step process for interacting with you like in the following chart:

process

7. Thus, your financial planner has given you a complete explanation of how he is going to be working with The planner (after having got the necessary information from you) takes the next step of conducting a risk profiling test.

8. Now that your goals are clear, the risk profiling test indicates whether you have an aggressive or balanced or conservative risk The planner now looks at mapping your investments and lays emphasise on saving systematically and always aligning all your investments with changing market conditions. This alignment is called as rebalancing your equity-debt portfolio. This alignment would ensure the smoothening of the trajectory and protects you from the peaks and troughs of the market.

9. The planner would continuously review all your necessary insurances like life, health, home, office, travel, disability, critical illness, this review should ensure that you get advice on all insurances; relevant Insurance policies adequately cover you and your families. Thus, leaving no room to cause an effect on your money flows and safeguard your income to expenses flow too.

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10. Why is this kind of goal achievement process a grey area for most of the people? More likely because they don’t have Well, here, the planner’s role becomes significant as he continuously mentors the clients on the specific methods for each of the goals and educates on the right focus areas. Meanwhile, he continues to give the know-how for each goal achieved. He also provides the proper action steps for each goal. This becomes a cycle and every 3-6 month’s review meetings take care of all the doubts or fears.

11. Financial planners are not only for wealthy but for everyone who wants to ensure that their money is not rusting away and is put to optimum The planner makes you SMARTER with your goals and helps you secure your financial future. Thus he enables you to enjoy your current lifestyle and systematically achieve all your future dreams. He also works to get your existing cash flow work harder for you.

The future depends on what we do in our present -Mahatma Gandhi.

It is you who are responsible for your future. So, learn and make your money work harder for you.

You may be befuddled about how to distinguish Financial Planning from other kinds of financial advice. To help you know what to expect from the Financial Planning process, CFPCM practitioners follow specific standards – called Financial Planning Practice Standards when providing Financial Planning advice. Practice Standards describe the process that you should reasonably expect a Financial Planner to apply during a Financial Planning engagement. These standards are grounded in a six-step Financial Planning process as prescribed by the Financial Planning Standards, setting authorities around the world.

The Financial Planning process

  • How much should I save for my retirement?
  • How much life insurance do I need, and how do I best get it?
  • What is the ideal health insurance for my family?
  • How will inflation hit my investments?
  • How can I achieve financial freedom to pursue my passions in life?

A financial planner can help you get answers to all such questions.

Furthermore, he can alloy the “what if ” scenarios with your plans. Like what if I don’t want to retire 60 but at 50? What if my life expectancy is not 75 but 85?

A financial planner can be your best friend to answer some of the following broad thoughts. These are the issues that you are not able to ask even your best friend. It would help if you then had a friend on whom you can trust and someone who can keep your cherished dreams and personal thoughts, entirely confidential. Some of these opinions could be: (These have come from my clients who have asked me such dilemmas!):

  • I am looking to get a divorce from husband shortly.
  • I am worried about my job as I may be asked to quit in the next 3 months.
  • I want to have a confidential will made.
  • I don’t know the value of the house I should buy?
  • Should I save for my retirement first or my child’s education?
  • I want to invest a lump sum amount in an aggressive mutual fund but, is it the right time to enter the market?

A good financial planner facilitates such solutions within the given resources and risk appetite of the client. They provide the right direction. They offer objective advice that also has options attached to it. They do not place just any brochure of an investment opportunity across the table!

I want to share that I have many friends who are my clients for life! I have many clients who are also friends for life! I enjoy working with them on their goals and make their money work harder for them.

As Robert Kiyosaki says: We do not have to work hard for our money, rather our money should work hard for us”

So, now you know how a financial planner works! Trust him with your life’s dreams and enjoy the journey, meanwhile. Wish you a Happy Planning for Life!

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