Executive Summary – The financial planner has an important role in those aspects of life that are affected by your finances. But he has a more comprehensive role than just buying some financial products and making an investment plan when his services are hired at the beginning. The financial planner can take care of tax planning, managing financial emergencies, educate the client on financial matters, manage the portfolio in an unbiased manner and from a long term perspective.
- It is not just about products – The financial planner is not there just to pick stocks, buy mutual fund schemes and file your tax returns. He has a more comprehensive role. He should work with you to reach your long term financial goals, manage financial risks for you and your family and motivate you to have a balanced investment portfolio.
- Manage Financial Emergencies – Financial Planning is an ongoing process. It is not enough to plan all investments once and close it. The client may face emergencies which can affect him financially. The planner must plan for this in the financial plan and step up to the event and take care of financial aspects during emergencies.
- Plan your Taxes – A financial planner will ensure that your tax returns are filed accurately on time. A good financial planner will plan short-term and long-term investments such that there is minimum outgo of tax.
- Manage Portfolio in an unbiased Manner – The financial planner must recommend products suitable for the client's financial situation. He should not recommend products just because he would earn commission or it is the latest product in the market. He should give him a true and impartial perspective of the product and advice such that the investments are managed in the best possible way.
- Give detailed explanation on investment recommendations – The financial planner must educate the client on investment strategy. He cannot expect the client to follow his advice blindly. The client may not understand the importance or the theory behind portfolio diversification, need for insurance, retirement planning or budgeting. If the financial planner explains why he is taking certain steps or investing in certain products, the client will be more understanding and try to follow his advice more diligently. The financial planner should explain the pros and cons of the investment, the risk and returns involved. There are numerous products launched in the market, many IPOs hit the market and different assets behave differently in different market conditions. The financial planner should help the client understand different products, different market conditions and help him compare them.
- Long term financial planning for generations – A financial planner should cater to the long term financial needs of the family. He should plan the finances such that investments are done keeping in mind the next generations as well. He should take care of estate planning and wealth building. He should build the portfolio, monitor it and make the portfolio's value grow over time.
Do you have a financial planner? Do you think he is taking care of the points mentioned above? If you are looking for a financial planner, select a financial planner who has the skills to take care of your overall financial planning needs.