Whether you are retired, approaching retirement, or want to explore your money management options, look no further than your local financial planner. These firms specialize in helping individuals develop sound financial strategic plans and offer hands-on experience to help understand the various concepts and products available to you.

WHAT IS A FINANCIAL PLANNER

A financial planner takes inventory of your finances, then guides you in meeting your current financial needs and long-term goals. That typically means assessing your financial situation, understanding what you want your money to do for you (both now and in the future) and helping create a plan to get you there. Financial planners can help you reduce spending, pay off debt, and save and invest for the future. But financial pros are like doctors: some are specialists in defined areas, such as taxes or managing investments. Others, like certified financial planners, are general practitioners, offering advice on everything from budgeting and investing to insurance and retirement planning.

do you need a financial planner?

Generally speaking, the more complex your financial situation, the more likely you are to benefit from a financial planner. If your finances are simple, you may be able to take a DIY approach, but financial planners can provide an objective perspective and bring expertise to decisions about how you should invest your money, what your financial priorities should be and what sort of insurance coverage and other protections you need. For those whose financial situations are starting to get more complex, it may make sense to hire a planner to create a financial roadmap for them. People who just got married or are planning on having kids may want to speak with a planner about how to successfully blend their finances with their spouses or what type of college savings accounts they should consider opening. They can also help you figure out your finances if you are going through a divorce. Retirement is another aspect of financial planning that some people feel unsure of how to do on their own. A planner can do all the difficult math for you and tell you how much you need to be saving now to be ready for the future.

A planner will also be able to guide you through difficult situations that affect your finances, such as a job loss or the death of a spouse. Hiring a financial professional can be useful for anyone, even those who don’t have any of these specific financial needs.

fINANCIAL PLANNING PROCESS

There are a few guiding principles that need to be followed before arriving at financial planning.

Analyze your current financial status.
Divide and distribute your current income under different heads.
Know all unavoidable tax implications of your income or investments.
Ensure you and your family’s health and life.
Plan your investments.
Clear your debts at the earliest.
Take the assistance of a qualified financial planner.

Additional things to remember are:

Set realistic time-bound achievable goals
List down all your expenditures, and even impending near future ones, prepare for an emergency pool of funds to fall back on in extreme conditions.
Very important to attack toxic debt because it will eat away all your potential future savings.
Careful selection of Investment at an early stage of your life to really grow your savings compounding
Look for stability than risking your money out of greed

TYPES OF FINANCIAL PLANNING

There are primarily three types of financial plans that include:

A short-term financial plan is determined for a time span of 1 year. This plan takes into consideration your current income and other financial resources at your disposal and your needs.

A medium-term financial plan is determined to keep a five-year time span in mind. This takes into consideration, your career path, future income increment and growth prospect and your needs.

Long-term financial plan determined for a time span of five years and more. These are generally big money/ investment goals. This requires systematic planning, savings, expenditure control, tax savings and meticulously following of the financial planning strategy and roadmap.

Broadly, in technical terms, financial planning revolves around how well you do the following:

Cash flow Management
Investment Management
Debt Management
Tax Management
Real Estate Investment Management
Retirement Planning Management

Cashflow Management: Managing cash flow, defined as inflow and outflow of funds, is crucial for your financial management. In simple terms, it is to keep a tab on your income and expenses. You need to estimate your present and future expenditure, accordingly, you need to create a roadmap to keep your expenditures under control and achieve your financial goals faster. Cash flow management also refers to creating a pool of emergency funds for unforeseen financial needs like health-related expenditures, or any kind of unplanned expenditure. For beginners, it will help them derive the amount of disposable income after meeting all the necessary expenditure.

Investment Funds Planning & Management: This is driven by your short term and long term goals and roadmap to achieve those in a time-bound fashion. There is no denying that one needs to accumulate enough corpus of funds to meet high-value goals, such as buying a house, educational and marriage expenditure of children, etc. It is essential that you should work towards building sizeable funds at different stages of your life by investing in various investment instruments early in your life.

Insurance Investment Planning: Insurance is your safety net for you and your family. In case of any unfortunate event, it is the insurance amount that will be a savior for your family after you. Insurance such as Life insurance, health insurance, home & vehicle insurance is some of the inevitable insurance that you should add to your life as a part of your financial planning as you cruise along with life. Insurance also acts as a hedge during market fluctuations and inflation and keeps you future-ready.

Tax Planning & Management: This is a liability that you have to factor in in your expenditure to arrive at your disposable income. Tax exemption and tax liability minimization is of utmost importance to maximize your real income. You need to take the help of invest planners or tax consultants to invest in tax saving instruments, through various government and private investment schemes. This way you also contribute to the development of the economy and infrastructure for the future and next-generation which include your children to make their lives better.

Real Estate Investment Planning: The most sought-after goal of most people worldwide is to create a permanent shelter for them and their families. This is one of the most important goals of people who do not have a house of their own. Buying a house is a big investment and requires meticulous planning and a road map to achieve it. This is also a great tax savings investment under government tax exemption. Real estate can also act as an investment and future income stream, by investing in by commercial estates such as shops, offices, second houses. All of these are capable of generating a stable future income stream for you and your family.

Retirement Planning & Management: This is for you and to secure your and your spouse’s future so that you do get dependent on your children as much as possible and maintain your dignity as a parent. The last thing that all parents want is to live old age at the mercy of their children. All want to live their head held high till the last breath. So a secure old age inevitably calls for a secure retirement planning. A secure retirement planning in advance, early in your life is the key to a peaceful retirement without worrying about finances related to day to day and health-related expenditures. Taking health insurance early in your life goes a long way to reduce health expenditures later in your life.

QUESTIONS FOR YOUR FINANCIAL PLANNER

To find your best match, first consider the type of help you want. Then explore fees, qualifications, your working relationship, investment details and more. Before you commit to a financial planner, you want to make sure you’re hiring the best person for you and your situation. Start by asking yourself a key question, What type of help are you looking for?

You want personalized financial advice, but don't need to meet the planner in person. There are a crop of services offering online financial planning for less than you'd pay a traditional in-personal financial planner or financial consultant. These companies provide complete investment management and holistic financial planning; the major difference is that you'll meet your planner virtually — by phone or video chat — rather than in a local office. Most services pair you with a dedicated planner or certified financial planner; some less-expensive options offer access to a team of advisors.

You want a local planner or a wider array of financial advice: you may want in-person financial planning or have a more complex situation, you may decide a traditional local financial planner is right for you.

Once you have found a financial planner to work with, ask these question during the interview process to help understand how their firm works, how your planner is paid, and what to expect from their services.

Are you a fiduciary?
A fiduciary works in the best interest of the client. Nonfiduciary need only to recommend products that are “suitable” — even if they're not the lowest-cost or most ideal for you.
How do you get paid?
Advisors can use a variety of fee structures. To keep it simple and avoid conflicts of interest, focus on fee-only advisors. They don’t get commissions for selling products. Fee-only advisors might charge a percentage of the assets they manage for you (1% is common), a flat fee for services or an hourly fee.
What are my all-in costs?
In addition to paying the advisor, you’ll face other fees — and you'll want to know what they are. Fees can decimate your savings over time.
What are your qualifications?
Financial professionals can have a confusing list of initials behind their names. And whether a finance professional goes by "investment advisor" or has the CFP designation, it's your job to vet them. The Financial Industry Regulatory Authority's professional designations database will tell you what they mean; if there are any education requirements; if anyone accredits the designation; whether there's a published list of disciplinary actions; and if you can check professional status.
How will our relationship work?
Put another way: How much access will you have to the advisor? You want to know how often you’ll meet and whether they are available for phone calls or emails outside of scheduled appointments.
What's your investment philosophy?
It’s important to ensure you have the same investment philosophy. It's also important to make sure you and your advisor align on investment style. For example, if impact investing is important to you, you may want to ask whether or not your planner will be able to help you create a portfolio that aligns with your values.
What asset allocation will you use?
You’ve heard how important it is to be diversified, right? Your asset allocation is how you create a diversified portfolio. Your portfolio should include domestic and international stocks, and small-, mid- and large-cap companies.
What investment benchmarks do you use?
Advisors should use benchmarks that directly relate to what they’re invested in, or be able to explain why they don’t. Investors use benchmarks to evaluate the performance of individual investments and groups or portfolios of investments.
Who is your custodian?
Ideally, your financial advisor has hired an independent custodian, such as a brokerage, to hold your investments, rather than act as his or her own . This provides an important safety check for the clients since they are able to check their accounts and verify the status versus trusting in the word of the advisor only.
What tax hit do I face if I invest with you?
This helps ensure the advisor has your tax bill in mind when making financial decisions. And asking about taxes and fees is a way to explore what your estimated net return might be.

If the idea of interviewing a planner makes you nervous, keep in mind that even they think it’s important to do interviews. Be sure to tell the planner that you’re interviewing others, so they know you’re not making an immediate decision. Finally, don’t forget that you’re paying for someone to clarify your financial life, not make it more confusing. If a planner makes you feel uneasy, doesn’t explain the information, or seems unprofessional, walk away.