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FINANCIAl PLANNING	Why do you go to a doctor for matters concerning your physical health? The answer is very simple because a doctor is a qualified professional who has a thorough knowledge of his subject and gives advice based on scientific research. So, wouldn't it be nice if you seek similar advice based on scientific research by a professional, on matters relating to your financial health. Get a financial plan for yourself today. Say 'NO' to adhoc investment decision-making, adopt a planned, systematic and disciplined approach to investments. Adhoc investing could be injurious to your financial health.
what is a financial plan? A financial plan is the outcome of financial planning process. Financial planning is the process of meeting your life's goals throughproper management of your finances. Your life's goals could include buying a house, saving for your child's education or planning for retirement. It serves as a road map to achieve your financial goals. Just as you need a road map before you start a journey which tells you which way to take to reach your destination, similarly you need a financial plan to fulfil your financial goals.
YOUR ROAD TO FINANCIAL SUCCESS

Can you prepare your own financial plan?
There are some personal finance websites, some books or friends offering help at hand. But what do you do when you fall ill? Go to a qualified doctor or seek help from websites, books or friends. The moot question is when you rely on a professional for matters concerning your health then why not on matters concerning your wealth?
The world of investments offers you complex options, for example, there are over 300 companies offering fixed deposits and over 550 schemes of mutual funds to choose from.
Markets are very volatile and one is required to monitor them regularly. You have your job and day-to-day chores to take care of and hence cannot devote time to study the markets daily. A direct investment into equities would demand exactly that. If any laxity is observed in taking any decision the result could be a loss on investment, which occasionally is irrecoverable.
Life is full of uncertainties. There could be moments when you could require funds in case of an emergency and you could find those funds locked up in illiquid investments. The changes happening in markets may enthuse an investor to alter his investment profile without realizing that such decisions may lead to a heavy loss. For example, short-term fluctuations are a part of equity markets and investment in equity funds is done with long-term objectives. If investment is made into equity funds with short-term horizon, the results could be heart rendering.
Human beings follow herd mentality while investing. If one of your friends has gained in a particular investment it does not mean that result will be same for you too. It is better to make investment based on solid research even if it comes with a little price, because the chances of success are more here than in an investment based on blind following.

Investments offers complex options - there are over 300 companies offering fixed deposits and over 550 schemes of mutual funds to choose from. A financial planner can be of great help here.

Some of the common mistakes made while preparing financial plan

1. Not setting measurable goals.
2. Making a financial decision without understanding its effect on other financial issues.
3. Confusing financial planning with investing.
4. Neglecting to re-evaluate the financial plan periodically.
5. Thinking that financial planning is only for the wealthy.
6. Thinking that financial planning is for when they get older.
7. Thinking that financial planning is the same as retirement planning.
8. Waiting until a money crisis to begin financial planning.
9. Expecting unrealistic return on investments.
10. Believing that financial planning is primarily tax planning.
Source: Association of Financial Planners

Benefits of financial planning
As stated earlier a financial plan is the end result of a financial planning process, thus it is important to understand the importance of financial planning. Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example buying a particular investment product might help you payoff your loans faster or it might delay your retirement significantly. By viewing each financial decision as a part of the whole, you can consider its short and long term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

Financial planning provides direction and meaning to
your financial decisions.

Financial planning v/s investment planning
What does a financial planner do which is different from what a normal broker does? A normal broker makes recommendations for investments, commonly referred to as investment planning. However, financial planning is not simply the ad hoc purchase of a range of investments, rather, the investments are the end process of a financial plan's implementation. Financial planning involves a detailed examination of a client's current and future financial needs leading to a clear definition of these needs. Implicit in the process of personal financial planning is the preparation of a written plan that details a client's financial needs and resources, establishes set objectives, and in appropriate circumstances, details specific recommendations. Your financial planner will help you to not only identify but also prioritize your needs and then make a judicious allocation of your resources.
Successful investing for you does not mean sourcing the highest possible return, but means placing your money with investments that satisfy your needs. When investing, much attention is directed towards the choice of investments, but in financial planning, the emphasis is on exploring and meeting the investor's needs. Investors and their advisors spend a great deal of time understanding the merits of the investments, which are available. Little time is spent understanding the needs of each person and insuring that the most appropriate investments are selected. That is essentially the difference between a broker and a financial planner. The success of a financial planner is measured by how well he or she has managed to meet the client's needs.

How to make financial planning work for you
To achieve the best results from your financial planning engagement, consider the following advice:

Set measurable goals
Set specific targets of what you need to achieve and when you want to achieve results. For example, instead of saying you want to be 'comfortable' when you retire or that you want your children to attend 'good' schools, you need to quantify what 'comfortable and 'good' mean so that you'll know when you've reached your goals.
Understand the effect of each financial decision periodically.
Each financial planning you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child's education may have influence on your retirement goals. Remember that all of your financial decisions are interrelated.
Re-evaluate your financial situation periodically.
Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.
Start planning as soon as you can.
Don't delay your financial planning. People, who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.
Be realistic in your expectations.
Financial planning is a common sense disciplined approach to managing your finances to reach life goals. It cannot change your situation overnight, it is a life long process. Remember that events beyond your control such as inflation or changes in
the stock market or interest rates will affect your financial planning results.
Realize that you are in-charge.
If you're working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all of the relevant information on your financial planning status. Ask questions about the recommendations offered to you and play an active role in decision - making.

Need for a financial Planner to make a financial plan
A financial planner is someone who uses the financial planning process to help you figure out how to meet your life goals. The planner can take a 'big picture' view of your financial situation and make financial planning recommendations that are right for you. The planner can look at all your needs including budgeting and saving, taxes, investments, insurance and retirement planning. Or, the planner may work with you on a single financial issue but within the context of your overall financial situation. This big picture approach to your financial goals sets the planner apart from other financial advisers, who may have been trained to focus on a particular area of your financial life.

Financial planning Process
The financial planning process consists of the following six steps:

Establishing and defining the client-planner relationship.
The financial planner explains or documents the services to be provided to you and defines both his and your responsibilities. The planner explains fully how he will be paid and by whom. The planner may also disclose any restrictions on his liability to give unbiased advice and disclose any conflict of interest.
Gathering client data, including goals.
The financial planner then asks for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial gathers all the necessary documents before giving you the advice you need.
Analyzing and evaluating your financial status.
The financial planner analyzes your information to assess your current situation and determine what you must do to meet your goals. This could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
Developing and planning financial planning recommendations and/or alternatives.
Thereafter the financial planner offers financial planning recommendations that address your goals, based on the information you provide. The planner should goes over the recommendations with you to help you understand them so that you make informed decisions. The planner also listens to your concerns and revises the recommendations as appropriate.
Implementing financial planning recommendations.
You and your planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your 'coach', coordinating the whole process with you and other professionals such as solicitors and stockbrokers.
Monitoring financial planning recommendations.
You and your planner should also agree on who will monitor your progress towards your goals. If your planner is in charge of the process, he should report to you personally to review your situation and adjust the recommendations, if needed, as your life changes.

Financial Planner - your friend and guide
We do not live in world where everything is picture perfect. What we face is a maze and we have to find our way to our destination. In this context the importance of a guide who could help us to find our way out of it is immense. Everyday newspapers are filled up with all kinds of news, which could be helpful in taking investment decisions. But it requires specialized knowledge to extract the relevant news and analyse it. A financial planner does exactly that.

It is always better that your financial planner be an
institution and rather than an individual. This is because an institution is better organized, more consistent, unbiased and has much wider reach than an
individual financial planner.

He gives only that information to his client, which is relevant for him and eliminates other non-useful information
A financial planner is to personal finance as a doctor is to one’s health. A financial planner adopts a holistic view of the investor's financial well-being. The investor is central to his entire process. His primary objective is to work for his clients and take into account their current circumstances, objectives, ambitions and past experience.
A financial planner does not aim to sell the investment products to his clients in order to try to earn brokerage from the financial product manufacturers. Instead he earns his livelihood from charging a fee from his clients. Even if he is not charging any fees, he avoids any bias creeping into his product recommendations.
Withstanding the volatilities of the markets could be easier with the help of a financial planner. A financial planner is a full time professional devoted to studying the movements of nvestment markets. He can help in taking the crucial decisions relating to entry or exit from an investments.
The benefit of consulting a financial planner is that, it creates a two-way relationship. He comes to know about your interests and continuously keeps a watch over them. You can reach him for your questions and he in turn can advise you whenever any situation arises which may affect your investments.
Nobody understands the importance of retirement planning better than a financial planner does. Retirement planning is a long-term project. People tend to postpone it. One has to make provisions for those days when one would be too old to work but still need income to live. Your financial planner can be of a great help in planning for tomorrow.
A financial planner could be of great help in deciding the suitability of a particular investment. Just as every coin has two sides, every investment also has two sides. One is the return offered by it and the second is its taxability. Normally people look at one side and ignore the other. This could lead to problems. For example, a person in high tax bracket may invest in instruments that could further increase his tax liability. With the help of a financial advisor one can plan to reduce one’s existing tax liability and choose investments which are more tax efficient.

Financial Planner - An institution or an individual?
It is always better that your financial planner be an institution and rather than an individual. This is because an institution is better organized and has much wider reach than an individual financial planner. An institution has much better resources at its disposal than an individual, resulting in research based scientific advice. Also, there is consistency in advice given by an institutional financial planner, whereas an advice of a individual financial planner could be biased due to individual's preferences. So, it is better to have an individual in an institution as your investment advisor rather than an individual himself.