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issues through proper planning, which includes but is not limited to these major areas: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).
People enlist the help of a financial planner because of the complexity of performing the following:
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Finding direction and meaning in one's financial decisions; Understanding how each financial decision affects other areas of finance; and Adapting to life changes in order to feel more financially secure.
The best results of working with a comprehensive financial planner, from an individual client or family's perspective are:
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To create the greatest probability that all financial goals (anything requiring both money and planning to achieve) are accomplished by the target date, and To have a frequently-updated sensible plan that is proactive enough to accommodate any major unexpected financial event which could negatively affect the plan, and To make intelligent financial choices along the way (whether to "buy or lease" whether to "refinance or pay-off" etc.).
Before working with a comprehensive financial planner, a client should establish that the planner is competent and worthy of trust, and will act in the client's interests rather than being primarily interested in selling the client financial products for his own benefit. As the relationship unfolds, an individual financial planning client's objective in working with a comprehensive financial planer is to clearly understand what needs to be done to implement the financial plan created for them. So, in many ways, a financial planner's step-by-step written implementation plan of action items, created after the plan is completed, has more value to many clients than the plan itself. The comprehensive written lifetime financial plan is a technical document utilized by the financial planner, the written implementation plan of action is just a few pages of action items required to implement the plan; a much more "usable" document to the client.
Personal financial planning is broadly defined as "a process of determining an individual's financial goals, purposes in life and life's priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals." The individual's goals are used as guideposts to map a course of action on 'what needs to be done' to reach those goals.
and what other things need to be considered in the process. In times where current sacrifices are involved. IRAs etc. the purpose of each goal is determined to ensure that the goal is meaningful in the context of the individual's situation. Many financial plans fail because these practical points were not sufficiently considered. Planning often requires consideration of self-constraints in postponing some enjoyment today for the sake of the future. If the resources are insufficient or absent to meet any of the goals. To be effective. Through a process of careful analysis. the constraints and obstacles to these goals are noted. 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. accumulation. In the process. Scope Financial planning should cover all areas of the client¶s financial needs and should result in the achievement of each of the client's goals. 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. A plan should consider the importance of each goal and should prioritize each goal. 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 including 401Ks. The information will be used later to determine if there are sufficient resources available to get to these goals.Alongside the data gathering exercise. conservation and distribution of assets Cash Flow and Liability Management Maintaining and enhancing personal cash flows through debt and lifestyle management Relationship Management Moving beyond pure product selling to understand and service the core needs of the client Education Planning for kids and the family members The process The personal financial planning process is according to ISO 22222:2005 a six-step process as follows: . the plan should consider the individual's current lifestyle so that the 'pain' in postponing current pleasures is bearable over the term of the plan. the particular goal will be adjusted to a more realistic level or will be replaced with a new goal. these goals are subjected to a reality check by considering the individual's current and future resources available to achieve them. the plan should help ensure that the pursuit of the goal will continue.
 What is a financial planner's job function? A financial planner specializes in the planning aspects of finance. the strategies and goals in the financial plan are revised accordingly. Step 3: Analyzing the information The information gathered is analysed so that the client's situation is properly understood. the strategies outlined in the plan are implemented using the resources allocated for the purpose. and involves considering the client's situation from all relevant angles to produce integrated solutions. If there is any significant change to the client's situation. some planners may be called 'comprehensive' or 'holistic' financial planners. and their roles have some functional differences. . Step 4: Constructing a financial plan Based on the understanding of what the client wants in the future and his current financial status. Financial planning is a growing industry with projected faster than average job growth through 2014. such as insurance planning (risk management) or retirement planning. Financial planning is usually a multi-step process.' the term is used largely to describe those who consider the entire financial picture of a client and then provide a comprehensive solution. although these two terms are technically not synonymous. To differentiate from the other types of financial planners. Although there are many types of 'financial planners. a roadmap to the client goals is drawn to facilitate the achievements of those goals. as contrasted with a stock broker who is generally concerned with the investments. The six-step financial planning process has been adopted by the International Organization for Standardization (ISO). Financial planners are also known by the title financial adviser in some countries. Other financial planners may specialize in one or more areas. Periodic reviews are undertaken to check for misalignment and changes in the client's situation. Step 5: Implementing the strategies in the plan Guided by the financial plan.Step 1: Setting goals with the client This step (that is usually performed in conjunction with Step 2) is meant to identify where the client wants to go in terms of his finances and life. or with a life insurance intermediary who advises on risk products. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are. 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. in particular personal finance. Step 6: Monitoring implementation and reviewing the plan The implementation process is closely monitored to ensure it stays in alignment to the client's goals.
writing or visiting places you always wished to? Retirement is like playing second and longest innings of one¶s life. If you were self-employed. How much money will be available through social security. In the past. it will help you understand what will be your income from different sources. Social Security Benefits. A realistic evaluation of what you own and what you owe is vital to take care of your financial needs during your retirement years. . Most of us reach retirement date with some unsettled debts like home mortgage. which will help you in planning a happy retirement.your Regular IRA and Roth IRA? Calculate the value of your 401(k) or 403(b) workplace retirement plans. do follow some basics of retirement planning. is the beginning of a new life. most of us start thinking about retirement planning when hardly 10 years¶ time is left for our retirement. This will give you real picture of your assets which is what you actually own. Effective retirement planning requires foreseeing the type of life you wish to lead after retirement. you certainly need some regular source of monthly income to take care of your day-today expenses. Getting a part-time job or starting a home-based business is good option to help you lead a happy and comfortable retirement life. If you take into consideration basics of retirement planning as suggested above. Assess all your debts and work out your net worth when you actually retire from active working life. Enjoying this phase comfortably and peacefully requires certain basics of retirement planning. It is critical to evaluate your assets and liabilities to ascertain your Net Worth. The current employment conditions have changed. the start of a second adulthood. Before you stop working. car. This is the era of early retirement which could be due to health reasons or layoffs. Equally. One should make sincere efforts to plan for retirement. one cannot solely depend on these resources. if social security exists when you retire.RETIREMENT PLANNING Retirement. investments etc. important part of retirement planning is assessment of your liabilities. Concept of retirement planning has changed over the years. Apart from depending on your savings. Your assets mean all that you own . Getting a clear picture of your projected retirement cash-flow is vital before you actually retire from active life. car loans or credit card debt. Nobody can predict the future because you don¶t know what will be return on your savings or what will be the inflation rate when you actually retire. Are you financially prepared to pursue the life that you have planned to lead when you actually retire? Financial planning for retirement is very important. Thus means that you may have a shorter working career and longer retirement as compared to the earlier generation. When you retire from your job you. Retirement planning in the 21st century needs different set of considerations from what it used to be. Personal savings and Defined Benefit Pension were considered main resources for leading a comfortable retired life. stop getting your paychecks. Other things that will form part of your assets are your personal properties like house. In present scenario. Unfortunately. if not more. Do you like traveling every year? Would you like to pursue your hobbies that you couldn¶t during your peak working years ± like gardening. did you create any selfemployment retirement account like SEP-IRA or Traditional IRA? Evaluate your other assets like annuities or life insurance policies.
Identify actions to improve readiness-to-retire. corporations etc. Investment management is the professional management of various securities (shares. whether one has enough money to retire. The provision of 'investment management services' includes elements of financial statement analysis.g. dollars. real estate) in order to meet specified investment goals for the benefit of the investors.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.. One must already have accumulated a significant amount of wealth for wealth management strategies to be effective and is also one of the key areas that are growing at a tremendous rate. Independent wealth managers use their experience in estate planning. small business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate retail banking. mutual funds or exchange-traded funds). Wealth management is often referred to as a high-level form of private banking (for the especially affluent).e. Investment management is a large and important global industry in its own right responsible for caretaking of trillions of yuan. High Net Worth Individuals (HNWIs). Wealth management is an investment advisory discipline that incorporates financial planning. MBAs.The term asset management is often used to refer to the investment management of collective investments. and 2. i. risk management. Assess readiness-to-retire given a desired retirement age and lifestyle. (not necessarily) while the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. pounds and yen. CFA Charterholders or any credentialed professional money manager who works to enhance the income. growth and tax favored treatment of long-term investors. investment portfolio management and a number of aggregated financial services. Wealth management can be provided by large corporate entities.g. legal resources. tax professionals and investment management. stock selection. Coming under the remit of financial services many of the world's largest companies are at least in part investment managers and employ millions of staff and create billions in revenue. bonds and other securities) and assets (e. asset selection. Wealth managers can be an independent CERTIFIED FINANCIAL PLANNER.and their .The process of retirement planning aims to: 1. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of so-called "private banking". estate planning. Investors may be institutions (insurance companies. pension funds. plan implementation and ongoing monitoring of investments. independent financial advisers or multi-licensed portfolio managers whose services are designed to focus on high-net worth clients. euro. Large banks and large brokerage houses create segmentation marketing-strategies to sell both proprietary and non-proprietary products and services to investors designated as potential high net-worth clients.
diversification. and when things get tough. portfolio and individual security levels. from objective sources. Although tax fraud is a criminal offense in Switzerland. 'stay the course'. The word "private" also alludes to bank secrecy and minimizing taxes through careful allocation of assets or by hiding assets from the taxing authorities. to manage the diverse holdings of high net worth clients. which is simply a nonincorporated banking institution. "The past 18 months have challenged traditional thinking about investing and asset allocation. access. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking. 'invest for the long term'. inheritance and tax planning for their clients. A high-level form of private banking (for the especially affluent) is often referred to as wealth management."  For this reason wealth managers must be prepared to respond to a greater need by clients to understand. Moreover. regarding all products and services owned by their clients to answer inquiries regarding performance and degree of risk-at the client. Banks and brokerage firms use advisory talent pools to aggregate these same services. the annual portfolio performance or a "flat-fee". investment and other financial services provided by banks to private individuals investing sizable assets. and communicate with advisers regarding their current relationship as well as the products and services that may satisfy future needs. only catering for high net worth individuals with liquidity over $2 million. An institution's private banking division will provide various services such as wealth management. savings. advisors must have sufficient information. "This state of affairs poses a dilemma for wealth managers. . for a generation. although it is now possible to open some private bank accounts with as little as $250.´  Private banking is a term for banking. For private banking services clients pay either based on the number of transactions. have adhered to the core principles of asset allocation and earned their keep by preaching the mantras of 'buy and hold'.affiliations with tax and legal specialists. usually calculated as a yearly percentage of the total investment amount. Swiss and certain offshore banks have been criticized for such cooperation with individuals practicing tax evasion. It should not be confused with a private bank. risk tolerances have been tested. Historically private banking has been viewed as very exclusive. tax evasion is only a civil offence. and fundamental truisms have been questioned. not requiring banks to notify taxing authorities. usually via dedicated bank advisers. The events of 2008 in the financial markets caused investors to address concerns within their portfolios.000 for private investors. investment assumptions have been overturned. and correlation. For individual investors. who.
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