Financial Planner – Concept, Roles, Needs, Types, Workings, Activities & more

One of the most important and complex activities of a firm includes financial activities. Thus, here comes the Financial Planner, as to take care of all the funds, you need a professional.

Above all, you need to know that a Financial Planner is an individual who takes care of a plethora of finance functions of the business. 

To make the most of the funds, the person must maintain farsightedness. 

Now, if you are planning to hire a Financial Manager, then you are on the right page as we have got your back. Here everything is covered regarding the financial planner.

About Financial Planner

A Financial Planner is an investment professional who helps not only individuals but also corporations to meet their long term jobs. 

Ideally, Financial Planners consult their clients to learn about their goals, risks, and life.

After learning about the details of the clients, the Financial Planners or managers select suitable investment schemes for the clients. 

Post that financial manager can set up a program and then distribute the savings of the clients into various schemes. These planners aim to grow the portfolio or provide some secondary income. 

Some Financial Planners also specialize in niches like retirement and estate planning,  tax planning, asset allocation, and risk management.

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Role of Financial Planners

If you want your clients to trust in your recommendations, then as a financial planner, you must have plenty of education, training, and experience. 

Well, these qualifications can help the financial planner to earn some extra income for sure. Financial Planners provide some financial advice and manage the money of their clients. 

As the Financial Manager work the client’s money, you can call them as fiduciaries. 

In simple terms, you can say that Financial Planners or managers are legally bound to act in the best interests of clients. 

Additionally, these professionals can’t benefit from the assets of the clients. Instead, they are expected to manage the help of the clients for the client’s benefit instead of their own. 

Additionally, you can say fiduciaries most likely vary. For instance, registered investment advisors are fiduciaries available under the Investment Advisers Act of 1940. 

They advise the high net worth of the individuals. The majority of the registered investment advisors are fee only advisors.

It means they aren’t free to work off commissions or sell the investments of the clients if it is not in the best interest of the client.

Additionally, financial advisors don’t need to be registered investment advisors if they want to work under this model. 

Generally, the fee-only Financial Planners make money through the hourly rate or percentage rate of the investments they handle on the client’s behalf.

Over any broker or dealer, the Financial Planners have a fiduciary duty towards their clients. 

Additionally, Financial Managers generally work off commission money as payments from companies whose investment products they suggest. 

Workings of Financial Planner or Financial Manager

The Financial Planner can also make money if they open accounts on their client’s behalf.

Manage and organize Finances

The majority of the people today lead a busy life, and it is next to impossible to manage finances. Financial Planners can help in understanding the overall financial situation.

After identifying your goals and objectives, the Financial Managers then recommend the investment plans.  Their main aim is to help you achieve your goals.

Marriage and Children

It can be quite challenging to mix two independent financial lives, wildly if they are conflicting in nature. A financial planner helps in addressing some issues, including insurance.

They also help in preserving and protecting the assets. 

Divorce

When a marriage ends, it is ideally divesting financially. Often when it comes to dividing assets, it is a wrong decision.

Well, with the financial planner, you can get an idea of how in the long-term settlement will work. 

Have a Financial Windfall

Often winning individual financial returns can involve both financial and non-financial factors. For instance, it is good to donate some money to charity or debt. 

Various Activities of Finance Manager

Here are the list of activities taken care by Finance Manager –

Retirement Planning – When it comes to investment decisions, then you need to know that they form an essential part of your retirement planning.

Hence it is advisable to hire a financial planner who can help you achieve your retirement vision. 

Running a Business – Financial Managers are your best bet when it comes to setting a business. 

Designation of Certified Financial Planner

CFP or certified financial planner is one of the most common designations that Financial Managers hold. Certified Financial Planner Board of Standards, Inc. issues the designation.

The board is a non -profit certifying and standards-setting organization that conducts the CFP examination. 

In the areas of financial planning, a certified financial planner is a formal credential of expertise. It includes everything from taxation, estate planning, retirement, and insurance. 

Individuals who successfully complete the examination can get the designation. A certified financial manager can do way more than just advising clients on investments available. 

Be it offering help on retirement planning, budgeting, education savings, insurance coverage, etc. You need to know that financial planning is way more than just investing. 

How can you choose the right Financial Planner?

Before choosing any Financial Planner, you need to ask them some of the questions. 

• What are the conditionals?
• Can they offer references?
• What are the charges?
• What are the areas of expertise of these professionals?
• Will they act as fiduciary?
• What services do they offer?
• How do they settle disputes?

What do the Financial Planners do?

Ideally, Financial Planners are professionals who not only guide you to meet your current needs but also your long term objectives. 

It means they understand your financial situation and advise you on the investment strategies that they can implement. 

Besides that, they can also help you in minimizing your spending and even paying off the debt.

Just like doctors, these Financial Planners are specialized in some areas, including taxes or managing investments. 

On the other hand, some are general practitioners who can offer general advice on almost everything. 

Do you need a Financial Planner?

You are most likely to benefit from a Financial Planner if you are dealing with a tricky situation. 

Additionally, you can use DIY hacks if your problem is simple. But Financial Managers can not only offer an objective perspective but also help you in getting some expertise in decision making. 

They guide you in making your investments and even help you in sorting out your insurance needs. 

Different types of Financial Planners or Financial Manager

Here are the various types of Financial Planners –

Robo Advisors

If you are just a beginner, then Robo advisors are your best bet. These advisors can help you manage your portfolio at low costs and also make investments to meet your goals.

A computer algorithm mainly defines your investment mix. When the need arises, the algorithm adjusts it automatically. 

In-Person Financial Planners

A traditional financial planner is your best bet if you have complex needs.

The best part about these advisors is that they provide face to face advice for almost all complex situations. They charge on a fee basis, but the first consultation is mainly free.

Online Financial Planning Services

There are a plethora of companies that offer online financial planning services. In the majority of the cases, you get both a financial planner and a comprehensive investment plan.

The only difference here is that you will consult the Financial Planners through video conferencing.

These Financial Managers charge a little more than Robo advisors but less than traditional Financial Planners.

Difference between Financial Planners and Financial Advisors

The majority of the people today face a plethora of financial professionals. It leads to confusion about whether the person is a financial advisor or planner. 

You need to know that a financial planner is a type of financial advisor who helps not only companies but also individuals to meet their investment goals. 

The planner most likely specializes in taxes, investments, estate planning, etc. 

On the other hand, a financial advisor is a broad term that helps in managing money. All you need to do is pay the advisor in advance, and they will help you in a plethora of money-related activities. 

You can say that a financial advisor is a generic term that includes branches of the financial advisor group.

It also contains stockbrokers, money managers, insurance agents, bankers, and a lot more. 

When you compare financial manager and advisor, you need to think like keeping a funnel on top of a financial advisor.

Financial Planner – Conclusion

The majority of the people who need money choose to visit Financial Planners. Above all, you can determine your financial goals with the help of financial advisors. 

Additionally, you can also create a balanced plan to meet those objectives. The financial planner might also be aware of the guidelines set by SEBI so they can help you invest in the best scheme. 

But before you choose any financial manager, you must know what you are paying for. You can also consider having a plethora of questions to ask the financial advisor. 

Above all, Financial Managers can help you in achieving both short and long-term goals.

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