How to … find a financial planner

In the past, relatively unqualified people could set themselves up as financial advisers – and live off the high commissions many of their products delivered. But regulations have been tightened, and the industry now boasts a growing body of well-qualified professionals. This week, in our series on how to manage your money, we show you where to find one. Just as you would use a map for directions on how to get somewhere, you should have a financial plan to make sure that your financial affairs are in order and your financial needs can be met. However, a plan or map by itself is not nearly as handy as one that is implemented on an ongoing basis with the assistance of a guide, and your financial planner can be your guide. Financial planners come from varying backgrounds and operate in many different ways. It is critical, when choosing the right planner for your circumstances, to find out exactly who you are dealing with, whether they are qualified and licensed, where their field of expertise lies, and which institutions they are authorised to represent. You can use either an independent financial planner or a planner who is affiliated to a financial services company. A planner affiliated to a financial services company will be able to advise you only about products from that company whereas someone who operates independently is in a position to give you objective advice and can draw on investment and risk cover solutions from a range of financial institutions. Until some years ago there were no legislative requirements for financial planners, and many brokers or product-peddlers claimed to fulfil the services of financial planners – to the detriment of their clients. However, this scenario changed in 2002, with the implementation of the Financial Advisory and Intermediary Services (FAIS) Act, which introduced minimum qualifications and operational requirements as well as a code of conduct for financial planners. Anyone practising in this field has to, in terms of the FAIS Act, have a licence issued by the Financial Services Board to operate as a financial services provider (FSP). Sometimes, you will find that a company holds an FSP licence. The FSP will employ both representatives and “key individuals”, who must ensure that all the representatives are fully aware of the requirements of the FAIS Act.

Financial Services Advertising budget dropped

The ongoing downturn has forced firms to cut back on advertising expenses. The banking, financial services and insurance segment (BFSI) has cut advertising budgets by nearly 40 per cent.

An analysis of AdEx data, a comparison of the volume growth over the June-October period in 2007 with the corresponding period in 2008 , shows that bank advertising on TV decreased by 3 per cent, advertising for loans went down by 39 per cent and mutual fund advertising was down 84 per cent.

However, insurance grew by 74 per cent. So the decrease in advertising spend from the financial sector is countered to an extent by the insurance advertising increase to some extent.
BFSI sector contributes 5 per cent to the total advertising on TV. This financial year the estimated contribution is 350 crore.
Insurance has seen a drop in sales from 70-80 per cent to 30-40 per cent in the last quarter, but it hasn’t deterred companies’ spend on advertising. Debashis Sarkar, senior director and CMO, Max New York Life, says: “Insurance is a need rather than investment. Who can do without financial planning? In a downturn, while advertising is the first thing to bear the brunt, I believe otherwise. Brand building is a strategic investment.” Max’s advertising budget for this year is around Rs 60 crore.
Insurance sector advertising is growing for a host of reasons. Three new players entered have the sector this year: AEGON Religare, Sahara India Life Insurance and Canara HSBC Oriental Bank of Commerce Life Insurance.
Chandradeep Mitra, president and head, Mudra MAX (media buying arm), Mudra, says: “Earlier insurance companies used to advertise in the tax saving period of January to March. Now the ads run throughout the year. Companies have also added a slew of new products.”
Sarkar adds: “Tax-saving period does not need advertising, it just requires a more aggressive sales force. Advertising is done to attract people ltowards real saving from a long term perspective.”
Max alone contributed half of the total insurance advertising on TV, which is a very unusual spend from an insurance company. Max was the exclusive telecast sponsor of the IPL.
Sujit Ganguly, senior vice-president and head-marketing, ICICI Prudential, says: “For us the trend is not new. We have always been communicating that insurance is not a tax saving tool, it’s a long-term saving goal. On the back of strong advertising, we have reached a market share of 13.5 per cent from the last year’s 12.7 per cent. Our advertising budget is intact this year.”

Free clinic by Financial planners

A group of financial planners will conduct a free clinic this week for people who have questions or concerns about their finances.

The Financial Planning Association Kansas Chapter will have about 20 planners available from 4 to 9 p.m. Thursday at the WSU Hughes Metropolitan Complex at 29th Street North and Oliver.

Organizer Richard Stumpf said the clinic is for people who have questions but don’t know who to ask.

Any topic is open for discussion, including 401(k) accounts, estate planning, wills and taxes. No documentation is necessary. However, participants are encouraged to bring paperwork — account statements, wills, etc. –if they want to talk about specifics.

Stumpf said planners who participate are required to sign a pledge that they will not market their services.

Money Manager: A link between financial planning firms and prospective financial advisor seekers

From the very beginning, Money Manager developed lasting relationships with seekers and financial planning companies and always showed its gratitude for using the site as a bridge for future assets management.

Money Manager is an online site that creates a link between financial planning firms and prospective financial advisor seekers. It aims to collect profiles of services of different registered financial advisor and advising firms and deliver them to the users who are looking for such services. Some of these services include investment advisory services, credit counselling services, debt consolidation services, or a combination of such services.

The need for financial planning services is gradually increasing as life is becoming faster and more hectic; people conversely want to focus more on the meaningful aspects of their lives rather than spend their significant time and stress themselves in managing their assets. Moreover, the help of professional financial planning firms is becoming more effective as they continuously come up with new strategies and management tools to plan out strengthening the customers’ financial assets. Registered financial advisors enable their clients to have strong control on how to protect their assets and constantly make them grow.

Financial planning firms can be needed in any stage of a person’s life, and it is nice to know that they have built a solid industry, and they are here to stay. Whether it be about retirement, a change of job level, a change of civil status, a financial bankruptcy, or an issue of inheritance, Money Manager can help seekers of financial planning firms in choosing the best and most reputable institution there is. Money Manager ensures that the financial advisors and financial planning firms in its database are registered, legal, reputable, and have high degree of expertise.

From the very beginning, Money Manager developed lasting relationships with seekers and financial planning companies and always showed its gratitude for using the site as a bridge for future assets management. What sets Money Manager apart from other financial services marketing sites is its dedicated evaluation of its participation in the success of dynamics of the seeker and the helper, always making sure that the best client meets the best advisor and vice versa.

Respond Acquires Wiseradvisor, Strengthens Financial Planning Market Presence

Respond (www.respond.com), the leading online lead referral service that connects purchase-ready buyers with local sellers in real time, today announced that it has acquired WiserAdvisor.

WiserAdvisor, established in 2003, is the pioneer in offering an unbiased, objective and sophisticated matching service for potential investors searching for financial advisors who best fit their unique needs.

Acquiring WiserAdvisor will strengthen Respond’s presence in the financial space, which has been Respond’s fastest-growing sector. The acquisition enables Respond to provide its high-quality and real time investor leads to qualified financial advisors. This complements Respond’s current relationships with most existing firms in the financial planning leads market such as Paladin Registry, a registry of five star financial advisors who are acknowledged fiduciaries.

“This business consolidation helps Respond’s ability to serve financial planners and positions Respond and Paladin Registry as the leading providers of financial planning leads in this marketplace,” said Jack Waymire, Founder and CEO of Paladin Registry and author of Who’s Watching Your Money.

“Financial planning presents tremendous opportunity for lead generation service providers, such as Respond, and this acquisition further strengthens our presence in this space,” stated Atul Jain, Chairman and CEO of TEOCO, the parent company of Respond. “This acquisition and Respond’s track record of providing verified and qualified referrals enable us to provide significant value to our clients,” exclaimed Jitin Ahuja, Director of Respond.com.

“Respond combines superior technology with deep knowledge of the lead generation industry to offer a world-class service,” said Thomas Murcko, founder and CEO of WebFinance Inc. “This acquisition will accelerate their progress toward becoming the clear leader in online lead generation.”

Since 1998, Respond has been helping consumers find qualified service providers in over 300 categories such as wedding photographers, home contractors, accountants and numerous other professions. Today, Respond has narrowed its strategic focus to several, select industries – including financial services – to ensure they provide quality, verified leads to service providers and establish a strong reputation and market presence in their chosen markets.

ABOUT RESPOND

Respond is the leading online lead referral service that connects purchase-ready buyers with local sellers. Since 1999, over three million consumers have used Respond to find everything from banquet facilities to business loans. Today, Respond covers over a hundred types of services and delivers quality leads to entrepreneurial small businesses. Respond has been a line of business of TEOCO Corporation since 2002.

TEOCO is widely recognized for its commitment to Principled Entrepreneurship with a particular emphasis on alignment of its core values with employees, clients and the community. See more at www.teoco.com.

ABOUT WEBFINANCE

Founded in 1996, WebFinance Inc. is a financial Internet company which designs, builds, and nurtures business opportunities where technology and finance intersect. WebFinance Inc. is the parent company of a thriving family of financial websites whose goal is to help empower individuals to make better financial decisions. Our properties include InvestorGuide.com, InvestorWords.com, and BusinessDictionary.com.

Financial Planning: Start early and be rich

High salaries, fast lifestyle and latest gadgets are normal characteristics of the life of Indian youth in recent times. High economic growth rates have thrown up tremendous set of opportunities to earn and show talent. As a result the youth is working harder, smarter, earning a lot and spending it leisurely. Indeed a great situation to be in.

So, how does financial planning come into picture? How many of the young workforce out there has heard about the magic of compounding? Chances are great that most of them will be unaware of this vital component of a secure financial future.

Investing right and investing young is the mantra of accumulating wealth over a period of time. Even a small sum of Rs.500 invested early in proper investment vehicles will result in a big fortune over time.

It is ironical but true that it is not very uncommon to find young professionals having good salaries, with little or no financial security & ridden with all sorts of debts. Lack of knowledge regarding importance of investing early and various types of investment opportunities available takes it toll on the immediate as well as long term financial future.

For example, how many of credit card holders know that the interest rate charged on the cash withdrawal or outstanding balances using it carries an interest rate of around 40%! Credit card is visualized as easy money and cash withdrawals, paying only the minimum due is rampant practice among credit card holders and this is one of the major reasons of falling into debt and worsening credit ratings.

How does financial planning help in such a situation? First, it helps you understand the pros cons of various financial investment products like term insurance, ulips, fixed deposits, mutual funds, stocks, real estate etc. and helps you choose one according to your risk profile. Secondly, it helps you enumerate your financial goals- both short term and long term and plan your investments in such a way that you are able to fulfill your financial goals. It also helps you understand the cost of borrowing via various financial instruments and their impact on your financial future.

Starting early on the right financial track can be the difference between a successful and rewarding financial future or a debt ridden and insecure life full of financial difficulties.

Financial planning for young and restless

The Indian youth never had it so good. On the consumption side, the choice of goods and services available is unprecedented. And as far as income is concerned, given the blooming economy and its ever-improving prospects, opportunities have never been better. So, the youth is earning a lot and spending a lot.

It’s definitely a happy situation to be in.

As a college student, you should be focussing on your financial future as well as your studies. No, not the financial future consisting of next week’s pizza fund, but your long-term personal financial future. Make sure you start your life after studies on the right financial foot by treating your financial future seriously while you’re still in college.

Young investors have an edge over others on account of their age. In other words, a young investor has more time on hand as compared with a middle-aged investor or one who is nearing retirement.

Young investors can take higher risk as compared with middle-aged investors or nearing retirement investor. This in turn affords young investors greater flexibility while making investment decisions.

If we take an example, considering most young people spend Rs 500 every month, then calculate how much money they are losing. It can be illustrated with the help of compounding method.

The percentage of younger generation in India is higher compared with the older generation. Over the past couple of years Indian economy has seen unprecedented boom, leaving surplus money in the hands of people.

The young can use financial planning route to meet their future goals. They have their whole life ahead of them and ample time to plan for every goal including retirement. The problem with the masses is that they do not plan their finances. Some who have decent salary packages and enough surplus available also invest without doing proper asset allocation in various asset classes such as equity, debt, real estate, gold etc.

There are various investment avenues available to young investors and the various facets of each avenue such as small saving schemes, equity, mutual funds, ELSS, unit linked insurance plan etc.

Today’s youth should ensure that he is associated with the right investment advisor at all times. He could well be the individual who plugs the gap between youth achieving or not achieving his financial goals and objectives.

Financial markets have become very complex and there are varieties of products available to choose from. The choice of product will depend upon:

The age of the client
The time horizon of investments
The risk appetite of investor
Need of the investor

As a thumb rule, a person shall invest 100 minus his/her age percentage of his/her portfolio equity and the remaining in debt, after providing for sufficient amount in the form of liquid assets/cash for emergency provision. A person shall also plan for the purchase of a house.

If a young person has a high-risk appetite and the time horizon of investments is also long, he should invest more money in equity and equity-related instruments and fewer amounts in debt. When a person starts working, his income level is also low and there is very less surplus available for investments after meeting his monthly expenses. Every young person would like to become rich faster.

Small savings per month, if done in a disciplined and systematic manner, will lead to a higher amount of wealth accumulation over a longer period of time.

If a young person (23) starts saving Rs 2,000 per month till his age is 60, he will be able to accumulate Rs 3,96,06,204, if rate of return on investments is 15% pa. In this case I have not taken into consideration the increase in salary and thus increase in amount of investments.

The young investors first have to do their asset allocation. After deciding about asset allocation, the choice of products will start.

The writer is a certified financial planner and full member of FPSB India and working as academic and regional head (western region), International College of Financial Planning, Mumbai.

FPSB India relies on its members’ prudence, competence, and ethical standards to have submitted this write-up in good faith in their personal respective capacities.

No financial planning means bigger financial risks

Identifying proper financial goals and planning to achieve them in a systematic way is the heart of financial planning. Without a proper chalked out financial plan, there are a lot of risks. Often we find people without a proper retirement corpus and no money to bank upon because they haven’t planned for it in advance.

Not understanding the risk profile is another major drawback that a person faces if he hasn’t done proper financial planning. Imagine a retired person putting all his savings into a high risk mutual fund in anticipation for a high return, and loosing a major chunk of his hard earned money. At a time when he required a steady, stable income, he has simply wiped out his savings. Financial planning reduces the risks of loss by removing impulsive decisions through a seasoned and planned financial advice.

Besides planning for emergency, understanding the investment strategies and risk profiles, a financial plan helps you prepare for major events of life. Be it a marriage, buying a car, or a dream vacation, or buying a house, planning for kids education, daughter’s marriage all can be planned and executed in a desired manner with a well laid out financial plan.

Life often throws unexpected surprises like a divorce (which no one even dreams of when one marries) or a sudden lay off (which might mean a new job hunting and supporting the family or self for the entire jobless period). Tackling all these require prudent financial planning.

Another major expenditure, which is often ignored by parents, is the cost of educating their kids. The cost of education is increasing by each passing year and the desire to be in the forefront demands a good education. Can you imagine what a good schooling, good college, coupled with a foreign degree will cost? We are talking in Lakhs of Rupees here. If you don’t start saving for your kid’s education at early stages, chances are good that you’ll feel the cash crunch when the time comes.

Lifestyle changes as one grows in his or her life. The two bedroom house that you have now might be insufficient five years from now when you have two kids. Similarly, a long vacation every year might become inevitable. A bigger and more luxurious car might be required to complement your lifestyle as you shift into a plusher house. All this would require financial inputs at different stages of life, and being prepared beforehand will always help.

Financial planning: It pays to start right

Contrary to popular perception, financial planning involves much more than mere budgeting and is definitely an exercise which requires expert attention. Given the immense complexities of life, a complex financial marketplace, multifarious investment instruments, multiple short term and long terms financial goals, planning for a safe and worry free financial future is not an easy job.

There are many steps that go into the making of an efficient and truly effective financial plan. Proper goal setting and assessing one’s correct net worth are two of the most important principles of any financial planning process.

The first step is often the identification of the short and long term financial goals. One thing that should be kept in mind while deciding on financial goals is that the more tangible and precise the goals, the easier it is to plan for them.

Short term goals can be the things that you want to accomplish within a shorter time span say 3-5 years, like buying a car or a vacation etc. The long term goals have to be achieved over a period of 10 to 20 years or more like planning for daughter’s marriage, kids education, retirement planning, buying a house etc.

Assigning priorities to goals is another major thing that one should not overlook. Privatization of your goals will help you allocate your valuable financial resources in a way that is most profitable and allows you to accomplish the more important ones. For example, if you owe a huge credit card bill, it should be one of your priorities to get rid of this high interest debt before going on a vacation.

After the process of goal setting has been done, one needs to assess his current situation and get an accurate estimate of his or her existing net worth. This will require the listing of all the assets and liabilities one owes. Assets can be your bank balance, investment in stocks, mutual funds, gold, property, insurances, vehicles etc. And liabilities are the loans to repay (they could be home loan, personal loan, credit card debt, car loan).

Begin by estimating the value of your entire assets. The next step is to get an idea of the debts or liabilities you owe and subtract your liabilities from your assets. This will help you arrive at your net worth.

This exercise will give you a clear picture of what you have and what you owe. As a first step towards correcting the financial situation it is always better to get rid of costly debts such as credit card bills, personal loans, car loans etc. as soon as possible.

Why do we need financial planning?

There are at many reasons that necessitate the need for financial planning in every body’s life. Listed below are some of these, which will help you understand the importance of a good financial plan.

Prepare for financial emergencies

Life is full of testing times, and in almost every such situation having sound finances really help. Critical illness, accidents, death etc. limit or reduce our earning abilities. Having a corpus will help eliminate the pains associated with these emergencies to a great extent.

Get rid of debt

A good financial plan has a detailed cash flow analysis and takes into account the income, expenditure, life’s goals, and net worth. And if you have any debts, they are also taken care of. Good financial planning will help you eliminate high cost debts like credit card and personal loans as soon as possible.

Proper retirement planning

Retirement planning is a definite priority with every financial plan. Building a retirement corpus with proper investment advice and having assets that prepare you for a risk free and desired post retirement life, is not possible without a proper financial plan.

Creation of wealth

Financial planning creates a focused and systematic approach towards attaining life’s financial goals. A good financial planner will identify proper investment options for you, which will help you grow your money in a right way.