Financial Planner : Their Role and Responsibilities

In India, individual and families are presented with a broad spectrum of finance professionals all bundled as financial advisor or financial planner. Both titles are used by individuals as per their convenience. A financial advisor is used to describe anyone working as stock brokers, insurance agents, mutual fund distributors, bank employees, relationship managers, wealth managers, chartered accountants, real estate agents, and also pure sales or marketing people selling any financial products. While a financial planner is one who helps individuals and families create a program to handle money by taking into account their current and future needs, their risk profile and current income.

In India, Securities and Exchange board of India (SEBI) has clearly defined the role of a Registered Investment Advisor (RIA) as – “investment adviser” means any person, who for consideration, is engaged in the business of providing investment advice to clients. For more details on SEBI Investment advisor regulation refer to this link. Further, a person or company registered as RIA with SEBI should be the only one providing end-to-end financial planning services to individuals and families. In layman language these SEBI registered Investment advisors are also called financial planners.

Before hiring a financial planner to help you with your finances, question them about their training, qualifications, fee structure, and services they will provide. Check their disciplinary record and references to make sure you’re receiving the best quality financial guidance. Thus an individual or family must always perform due diligence before asking anyone for financial advice, since every financial planner (or RIA) can specialize in multiple financial advisories services, but every financial advisor may not necessarily be a financial planner. List of SEBI approved investment advisors can be found at this link.

Role of financial planner

Most people believe financial planners are just investment advisors, however a financial planner can provide useful inputs to an individual and family towards handling of many situations during different phases of their life. Some common situations where financial planners can provide useful inputs are –

1. 1. Organize and manage day-to-day finances – Many individuals and families lack the time, expertise, and discipline to put their financial house in order. Financial planners can examine their overall financial situation, and recommend methods to help put it in order.
   2. Buying a House or Property – Purchasing own house is a dream of each individual and family. A financial planner can help you with timing, budgeting and home loan financing of your home purchase.
   3. Funding college education and marriage of children – Ensuring proper education and marriage for children is a major goal for majority of Indian parents. And the job of a financial planner does not end at just selecting the most suitable and tax efficient investment options, rather it goes further involving efficient management of funds to ensure timely availability.
   4. Planning for retirement – Saving for retirement is an important part of financial planning. However one often overlooks planning about the kind of retirement live they want to live and accordingly about how to systematically withdraw their retirement funds post retirement. A financial planner can help you crystallize your retirement vision, then design a retirement plan to help towards achieving that vision.
   5. Estate planning – While one needs an attorney to draft their will utilized for estate planning, a financial planner can put those documents in the context of your circumstances and your vision of how you want your estate dispersed. Financial planner can provide useful inputs for various estate planning issues like the distribution of wealth, in life and in death.
   6. Educator – Part of the financial planner’s task is to help an individual and family understand what is involved in meeting their future goals. The education process may include detailed help with various topics. At the beginning of the relationship, those topics could be budgeting and saving. As one advances in their knowledge, the planner will assist them in complex investments, insurance, and tax matters.
   7. Career advice – Financial planners can provide useful advise to an individual and family on financial implications of a change in career, job switch or while moving between countries. This help may result in better decision making.
   8. Handling inheritance – Inheriting a substantial sum of money involves many factors and is often a deeply emotional. Financial planner can provide valuable advice on various financial issues related to inheritance.
   9. Handle financial documentation – A financial planner can help an individual or family handle their financial documentation and with basic record keeping.
   10. Insurance review – Financial planner will analyse your insurance needs with each change in life and suggest various insurance options in relation to changing circumstances and goals of the individual or family.
   11. Facing a financial crisis – Loss of a job, a serious illness, legal problem or a natural disaster are serious issues an individual or family may face in their lives. A financial planner can provide prompt financial advice to reduce some financial stress.
   12. Death of a spouse – It has been observed that surviving spouse – under great stress – makes critical long-term financial decisions without fully understanding all financial implications. A financial planner can provide individuals and families with important, informed and objective financial advice during these trying times.
   13. Charitable giving – Some individual and families are blessed with enough discretionary income and assets may want to make substantial donations to various charities. A financial planner can suggest options some of which help save taxes.
   14. In addition a financial planner should:

o  Periodically check with an individual or family to discuss prevailing economic conditions to         keep them updated on various aspects of financial markets.
o  Present “what if” scenario analysis about various possibilities for an individual or family                using available financial products. 
o  Propose adjustments to asset allocation for proper alignment with their current risk                       tolerance and financial goals.

Thus, all individual and families should have a dedicated financial planner just like a family physician. As they can provide valuable financial advice to help them overcome various situations in life.

Responsibilities of financial planner

In order to fulfill their role of helping individuals and families, a financial planner assumes various responsibilities listed below –

1. 1. An individual or family can’t properly plan for the future without knowing where they stand today. A financial planner as first step will first understand their financial health. Thus, an individual or family, will be asked to share their personal details and complete a list of questionnaire. 
   2. Financial planner reviews the answers provided by individual or family to understand their financial situation and makes certain that no important information is overlooked or missed.
   3. The planner works with the individual or family to get a complete picture of their goals, aspirations, current assets, liabilities, income, and expenses.
   4. Based on an individual or families current financial status and their aspirations, a financial planner defines their emergency requirements, insurance needs, their current tax status, their financial objectives, their risk tolerance, and any other information needed to develop a draft financial plan.
   5. Financial planner does research and analysis to create various drafts possibilities for the individual or family.
   6. Financial planner consolidates various financial forecasts and budgets. They analyse the working of an individual or family towards income, expense, savings, asset building expenses and other related areas to generate future trends.
   7. Financial planner create templates for financial plans, financial reviews and minutes of meetings.
   8. Financial planner helps create debt payment plans that clearly define payment priorities and timelines.
   9. Financial planner helps with appropriate asset allocation and financial product selection based on the needs of individual or family.
   10. In some cases, financial planner explains to an individual or family various financing possibilities available for college and university students.
   11. Financial planner monitors market trends and stay updated with latest financial products available in the market.
   12. Financial planner makes recommendations from time-to-time in areas such as cash management, insurance coverage, and investment planning.
   13. Financial planner works with other professionals, like attorneys, accountants, and investment bankers, to help an individual or family meet their financial objectives.
   14. Financial planner helps individuals or families open accounts and disburse funds according to financial goals.
   15. Financial planners periodically review ongoing financial accounts and plans regularly to account for changes that affect overall financial strategy of the individual or family.

The job of a financial planner is to help an individual or family with every aspect of their financial life. In fact, one can work with a financial planner without having them manage your portfolio or recommend investments at all.  However, for many people investment advice is a major reason to work with a financial planner. 

Conclusion

In this article, we have introduced you to the role and responsibilities of a financial planner toward their customers. We also tried to explained what a dedicated financial planner can do for an individual and family to help them in efficient handling of money. Hopefully this information should help you in using different capabilities of a financial planner more efficiently. For more information please feel free to reach out to us via email at – enquiry@taptoprosperity.com or by phone – 91-9515475381. 

Next Article – What you should know about Financial Planners

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any entity prior to publication.