Financial Planning

Financial Planning (32)

Family Office

Outsourcing family’s financial management

Managing personal finance have become challenging due to lack of time,expertise and complexity of financial products. A family office is an exclusive outsourcing arrangement which deals with management of personal finance and wealth of high net worth individuals, business houses and their family. This relationship usually stretches beyond the lifetime of an individual, extending financial guidance to subsequent generation of the family. The family office is manned by trustworthy, competent and qualified professional(s). 

Traditionally women are better at managing family’s budget and are more concerned about children’s education and marriage. We find women groups take to streets when prices of vegetables and other essential items increase beyond tolerable levels. Nowadays increasing number of women are opting for career in regular jobs. It provides them opportunity for financial independence. It’s a high time for women to take control of their finances for the numerous reasons; 

 (1) Increasing divorce rates – India is witnessing a surge in divorce rates and therefore entrusting your spouse with financial matters can land you in a money crunch. It is prudent to keep a tab on your monthly investments and determine holdings in your name, so as to avoid financial complications later.

  • How much experience do you have?  

    Financial planning involves understanding of investing behaviour, risk profile etc and the more the experience of the Financial Planner, the better. Hence experience should be a major driver behind your decision.           

  • What are your Qualifications?    

    A suitable qualification such as Certified Financial Planner and SEBI Registered Investment Adviser are desirable which indicates the Planner is serious of   his/her profession.   

Suyash, my neighbor heard about his colleagues discussing about tax benefit on buying a second home. He could not understand the implications and approached me. I explained him as follows,

Chitra is a home maker and finds it very difficult to manage the family budget now days and enquired from her husband Anil, who is employed as a Chartered Accountant in a MNC about when will the woes come to an end? Anil explained about the emerging scenario on depreciated rupee, high current account deficit, higher interest on Bank loans, higher consumption expenses and reduced savings. He even warned about either reduced salary or job loss. Both decided to take the help of a professional financial planner.The Financial Planner touched the ten areas which can help them to face the impact of slow down;

Mr. Suresh   is 52 years old and staying with his family in Navi Mumbai. He is working in an IT company in Mahape. He owns two apartments, one in Sanpada and another in Pune.He has also invested in   land at Karjat.  Mr Suresh has made a Will to avoid future litigation between his children. Initially he kept all his documents in bank lockers, for which he is paying locker charges of Rs 5,000/- pa. He finds it very inconvenient to visit the Bank every time to access to his documents. Further he has been told that he has to pay extra charge for each visit. Suresh was advised to safe keep his documents online. It’s also beneficial with respect to financial planning as every financial documents is easily accessible.

Ashok, studying in class VIII, plays cricket in the lane next to my Belapur, Navi Mumbai office. Last week he walked to me and asked “Can you please guide me how to make big money?” I was surprised and felt disturbed with this unconventional question. On detailed chat, I gathered that he is influenced by TV channel programmes on Cricket betting, Scams, and KBC and so on and so forth. Although I advised him to focus on his studies, I felt guilty by being a mute spectator on this changing relationship with money in the society today.

Life changing events, sometimes for the good such as getting married or joining a new job and sometimes for worse such as loosing the bread winner of the family or damage to the home by natural calamity will have financial implications on personal finance.

A professional financial planner can help to analyze the implications on your financial decisions and make a prudent financial plan to achieve your life’s goals. The goals may cover areas such as buying a house, meeting lifestyle expenses, educating your child in India or abroad, meeting marriage expenses of your child, planning a dream vacation abroad or creating retirement corpus.

Abhay is worried a lot now days. The family budget has gone out of control due to rising costs of grocery, vegetables and other household expenses. The annual vacation to the native place near Bhubaneswar  during Durga Puja has to be abandoned this year. The EMI of the home loan has increased by 20% since last  year due to hike in interest rates by his bank .The school fees  for  the son Subodh and  daughter Malini has gone up by more than 18% this year. 

Fee Only Vs Commission Based Financial Planner

When deciding on choosing a financial planner, you should understand the difference between fee only financial planners and commission based financial planners. By definition, a fee only financial planner charges fees for their advice on financial plan. Unlike fee only financial planners, commission based financial planners earns from the financial products that you buy.

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