Financial consultants offer advice particularly charted for a specific client company or an individual to invest and build wealth. Their services include financial planning and guidance through some insurance decisions. They might invest in buying and selling stocks on their client’s behalf or offer financial products.

The financial consultants meet with the client to discuss their finances like incomes and expenses, assets and liabilities, and form a plan accordingly to achieve their client’s different investment goals. These might include short-term goals like managing the taxes, trading in bonds, or long-term goals like buying a house, paying for grandchildren’s education, or even retirement planning.

Depending on their specialization, a financial consultant can help their client with specialized planning. Financial consultants and financial advisors are two different terms, although often used interchangeably. Financial consultants have a degree called the chartered financial consultant or ChFC. Make sure to ask your consultant or advisor about his certificates.

Financial consultancy can be done in three ways.

1.    Robo-advisor: if you want to make investments but want to manage your portfolio yourself, it is possible with a Robo-advisor.

2.    Online financial planning: These services provide financial planning at affordable rates than in-person consultants. 

3.    In-person financial consultants: in-person consultants can be expensive but can be beneficial in the long run. They can get to know you on a personal level which in turn would help you in terms of goals like buying a house or saving for retirement, etc.

Following are the services provided by a financial consultant.

1.    Investment advice

Investment advice is a recommendation or counsel that educates or informs an investor regarding a service or product. Bankers, brokers, financial advisors, and consultants provide investment advice specific to their client’s long-term or short-term goals.

The professional giving investment advice has to make sure of their client’s standings, assets, incomes, and expenses. The professional also has to make sure he has no conflict of interest in the specific investment service he is offering the client, or he is deemed liable for the damages or losses the client goes through.

2.    Taxation planning

Tax planning helps taxpayers to use the exemptions, deductions, and benefits to the best of their interest to minimize their payable taxes. Taxation planning is analyzing one’s financial situation to optimize the finances to the best of their abilities.

Taxation planning helps save one’s finances on taxes and at the same time conforms to the legal requirements and obligations of the Income Tax Act, 1961.

There are 4 types of Tax Planning:

      i.         Short-term tax planning: The planning that takes place and is executed at the end of the fiscal year to save the tax finances is termed Short-term tax planning.

    ii.         Long-term tax planning: This planning begins at the start of the fiscal year and the individual follows it through the year. The gains are not visible promptly, but it is beneficial in the long run.

   iii.         Permissive tax planning: This practice involves planning under different provisions of the taxation act like exemptions, deductions, incentives, etc.

   iv.         Purposive tax planning: Purposive tax planning includes using the taxpayer’s assets and other instruments to invest in diversified businesses, creating an arrangement to replace the agenda if needed

3.    Income management

Income management is the planning of controlled use of the family’s income in such a way that money is available for expenses throughout the month. Once you start managing your income, you will have a better idea of your financial standings. This will keep you from spending much of your money on imprudent expenses and increase your savings. Which, in turn, would help you with your other short or long-term financial goals.

4.    Risk management

Risk management is identifying and controlling the threats to your finances. These risks might be of any nature such as accidents, natural disasters, legal disputes or liabilities, etc. The five-step program to manage risk goes as follows.

      i.         Identifying the risk.

     ii.         Analyzing the impact of the risk on the business your finances

    iii.         Prioritizing the risk based on your financial goals.

   iv.         Respond to the risk with proper planning and process.

     v.         Observe the outcomes and make necessary adjustments to further risk management planning.

5.    Long-term planning

Long-term planning includes goals that take longer to achieve and needs rigorous planning. It shows how well your financial standing would be in the coming future. Long-term planning is concrete. Once set, the long-term goals cannot be changed. It starts executing the steps now to have a better tomorrow. The execution of long-term goals depends on the achievements of the short-term goals.

–       Why should we make long-term planning?

Long-term goals are important to take the business forward. Working in the now and forgetting the future does not necessarily help a business grow. To make sure of its financial standing in the future or to take it ahead in the market, long-term goals are necessary. Many companies, therefore, have a vision and mission statement as to their long-term goal. To achieve this goal management of its planning has to be done.

On a personal level, long-term planning helps you to be stable and financially secure. Making an appropriate plan will help you manage your finances and make the right investments now to have a better future.

6.    Estate planning

Estate planning includes how an individual’s assets would be managed, distributed, or preserved after their death or in case they become immobilized or disabled. Assets that make up an estate are houses, vehicles, bonds, debts, insurance, and pensions. This includes making a will, making charitable donations, naming beneficiaries, etc.

Benefits of estate planning:

–       It saves the family members from going through financial and legal processes in times of grief.

–       It avoids disputes and disagreements between family members regarding asset distribution.

–       It ensures that your loved ones get the financial stability you wanted to provide them with.

–       In case of incapacitation, naming an executor who is trustworthy to handle your finances is beneficial.

A.   Short-term planning

Short-term planning is done for achieving short-term goals. Such as buying a car, going on a vacation, etc. In a workplace, these goals are a bit different. They are related to improving the skills of their employees and achieving long-term goals. It helps you align your resources and control your expenses to reach your goals.

Having short-term goals are important as they allow you to focus on one thing at a time and keep you motivated. It minimizes the procrastination factor and shows you a clearer path to success. It helps keep your productivity up and achieve your long-term goals faster.

B.   Education planning

Education planning can be defined as a design for the comprehension of educational objectives and aims, through the ultimate utilization of available resources. Education planning helps with method solving without the trial-and-error phase.

Education planning helps in identifying goals and objectives. It helps in the equal distribution of scarce resources. Through proper education planning, a society can achieve its goals with proper means.

The following are the types of educational planning:

  i.         Administrative planning: Administrative planning relates to the distribution of responsibilities for different levels of education.

ii.         Academic/Curricular planning: This relates to the planning of the syllabus of different levels of education.

 iii.         Co-curricular planning: This type of planning focuses on extra activities like games or sports or business cultural activities or other programs.   

 iv.         Instructional planning: It includes the means of educating the class, the way the information is presented, monitoring their conduct, and evaluating them.

v.         Institutional planning: Institutional planning refers to the decisions the particular institute takes for education planning. This includes administration, academic and non-academic activities, and school and community relations.

C.   Retirement planning

Retirement planning means setting aside part of your income or investing it to gain benefits from it after your retirement. Most of the retirement planning process is examining your income, determining your expenses, and saving or investing accordingly by managing risks.

Retirement planning means guaranteed income for the family. In case of emergencies, you will have your finances to depend upon instead of asking for help from others. Although pensions and provident funds exist, they are not enough to cover all the expenses. Financial independence and stability are yet other important reasons for retirement planning.

D.   Family protection

A family protection plan is a type of insurance where the family is paid the amount in monthly income instead of a lump sum amount. Some banks have specified accounts for such plans which pay the family a specified amount each month like an income in case of the death of the account holder. This amount acts as an income for the family and thus makes them financially stable.

The family receives the benefit amount for the number of years mentioned in the policy. Different insurance companies have different plans for family protection. To ensure you get the best one within your capabilities, consult with your financial consultant or advisor.

E.    Loan protection

A loan protection plan helps you with the monthly payout in case of death or incapacitation or loss of job. It protects the individual from defaulting on his loan payments.

One of the benefits of taking loan protection insurance is that it does not burden your family. Your family would be safe from loan liabilities. Another reason is that your credit score is not affected and remains intact. Loan protection insurance can be taken on any loan such as a home loan, education loan, or even a personal loan.

F.    Mediclaim and health insurance- protection of savings

Mediclaim is an insurance that offers financial aid in health-related emergencies. However, it is limited to hospitalization and other expenses have to be paid by the insured. The hospitalization charges are paid directly by the insurance company to the hospital.

Health insurance covers medical and surgical costs. The insured has to pay the bills himself and then is reimbursed or the insurance company settles the payment with the hospital. As it covers more than just hospitalization, health insurance costs more than Mediclaim.

Before buying a Mediclaim or health insurance you have to make sure of certain things.

  i.         Sum: The sum insured cannot be changed and thus it is important to make sure it is the right amount.

ii.         Premium factors: The premium is based on the sum insured and the age and income of the insured. Disclosing these details while taking the insurance is of utmost importance.

 iii.         Claim settlement: This depends on whether you want to reimburse the amount or for it to be paid directly to the hospital.

 iv.         Tax exemptions: Some plans offer tax exemptions on paid premiums.  

Conclusion:

Marriage, having a child, retirement, or accidents can have major implications on your finances. Taking a professional’s help, you can steer through these tough waters with ease and it would help you in having a stable financial future.

Thanks for Reading, Always Welcome