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Financial Planning is the process of managing your expenses, savings and investments to ensure you meet your desired lifestyle and milestones. The financial planning process involves analysing your current situation, budgeting, and projecting future cash flows to determine how to reach your financial goals. Financial goals can include buying a house, planning for your children’s education, personal education, family vacation or retirement. Appropriate investment is a sub-set of financial planning, and, properly managed over a period of time, can provide a good source of returns and income.
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Financial planning differs from portfolio management in basic objectives. Financial Planning involves analyzing your current and projected monetary situation to manage your lifestyle and future financial goals. Portfolio management involves trying to obtain higher returns from investible surplus. Thus, portfolio management is in some sense a subset of financial planning.
The fee structure is also different. Portfolio managers typically charge a fee as a percentage of Asset-Under-Management and also a share of the profit. For financial planning, our fees are typically flat and fixed, based on the complexity of the customer’s financial situation.
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We believe that everyone needs a financial plan. A plan is not dependent on the current amount of wealth or on the stage of life. A very mistaken belief exists that financial planning is only for HNI’s or for those nearing retirement. Some people need a plan to help achieve their milestones, while others need it to help adjust their lifestyle in line with income. Still others would want a plan to inculcate the savings habit or to invest money prudently for wealth build-up.
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Of course, we believe this is one of the key reasons every individual needs to plan. Most investment avenues carry performance risk - for instance the stock market may crash or real estate may stagnate. However, with a diversified basket of investments in various asset classes, one can expect a steady wealth build up over the medium to long term. Financial planning also guides you to keep a section of your savings in liquid assets – to provide for emergencies or uncertainty in income stream.
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We, at PARK Financial Advisors, offer a comprehensive financial planning solution that covers budgeting, tax planning, risk-profile based investment planning, scenario planning, insurance and loan advisory or any subset of this gamut of services For more details please visit our Services page.
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| Based on your current financial assets and needs we will advise you on mutual funds, insurance, loans and tax optimization and provide execution support.
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While we use sophisticated mathematical tools to model the growth in your investment portfolio, it is important to keep in mind the inherent variability in market returns in most asset classes. Thus, we do not guarantee the success of the plan, but we do carry out Monte Carlo simulations to provide adequate confidence on achievement of goals and targets. However, success of the plan depends crucially on your discipline in sticking to the plan.
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The time commitment from your end (and ours) for developing your financial plan would depend to a large extent of the complexity of your financial situation – number of earning members, whether salaried or self-employed, size of family, etc. But an average of 2-3 meetings would typically be required initially, after which there would be half-yearly reviews. We estimate between 1-2 hours of your time needed for each meeting.
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Absolutely not! Planning is an ongoing relationship, where we would continuously monitor the movement of your portfolio and effectiveness of the plan. In most cases, we will send you regular portfolio updates and schedule semi-annual meetings to discuss performance and any modifications.
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We typically charge a flat fee for financial planning, depending the complexity of the client’s needs. While we offer free execution support for the plan, we do not insist that you carry out execution through us. This keeps us unbiased in our recommendations having only your benefit in mind – uncoloured by what investment avenues offer the brokers more commissions.
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Yes, completely! We at PARK are deeply committed to the confidentiality of your data. We have built in comprehensive processes to ensure that only your relationship manager has access to your data. If at all, only sanitised learnings from a particular situation are carried forward for use in other such cases.
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